If you have money in savings you may want to put the money to work to make your investments grow. It is important to earmark your money so that you know what type of investments that you can make with it. There are several different factors to consider.
1) First you should consider whether you would need to be able to access the money quickly. If it is your emergency fund you may want to leave it in a basic savings or money market account. It is important that you be able to access the money right away. If you are planning to use it for your children’s education than you can put it somewhere that it is not as easy to get to and that may earn you more money.
2) You should consider how much you need the money and how soon you will need it. If you need it in a short amount of time mutual funds may not be the best option, but if you can wait twenty years, then investing more aggressively can be beneficial.
3) You should consider where you have your other investments. It is dangerous to put all of your money in one stock or one mutual fund. If something were to happen you would lose everything. It is important to diversify because this spreads out the risks that you are taking. You may also consider other investments such as real estate in the future as well.
4) You should also decide on a purpose for the money you have saved. It may be a dream vacation, your child’s education or your retirement. If you do not have a purpose for the money, it is too easy to go ahead and spend it. It helps if you have specific goals so that you can work towards them and stay focused.
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