As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Saturday, 3 December 2011

I have some money rotting in the bank. Can you help me?

Just For Thinking ...

I often observe that some people are asking similar question in financial educational forums or blogs : "I have some money rotting in the bank. Can you help me?"

It is like going to your GP and ask:"Doc, I am not feeling well. Can you help?"

It is more important to ask yourself one question before going around asking others for financial advice.

Without knowing why are you keeping money in the bank; most likely these bloggers will give you motherhood statement responses. It is not going to be helpful to you.

That one question that you must ask yourself: Do you foresee the need to use up most of your money (e.g. 80-90%) in 1-2 years?

If yes, then losing the value of your money due to inflation may be better than taking the risk of losing your money to other market players. Time in the market can be your friend and your deadly foe.

Rotting or losing? Think again!

Read? Saving, Lending and Investing (2)

Generally, we save for use and we invest with a purpose. Understand? Too cheem?



7 comments:

  1. Hi CW,
    i always have some money "rotting" in the banks and even my CPF,s accounts.WHY? There are many reasons like you said. But it is a happier situation than i have nothing much to rot. i can't put all my money in equity, can't i? When i started investing, i almost did put al my money in equity. Why again?

    ReplyDelete
  2. Hi bro8888,

    "Motherhood" statement, I love it :)

    ReplyDelete
  3. some money 'rotting' in the bank - such haughty talk! I bet Warren Buffet doesn't even talk like that. Best to ignore people who defines money as if it is worthless like rubbish.

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  4. as a financial planner, i have always advocated having sufficient emergency funding at a moment's notice and that's why, having up to 12 months of liquid funds in a financial institution is a 'no-brainer',

    just my 2 cents' worth.

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  5. Hi William,
    "Rotting" in the bank is relative speaking only. Why? Because you can put all your money in "SMRT" you will get 4-5% dividend P/A. But if you need money urgently due to whatever reason, you may have to sell SMRT at a lost. So you keep some money in the bank lol @.01-.09 %P/A. for emergency use. So money in the bank is "rotting" relative to other places where you can park your money.
    Besides, some of us keep some money in the bank for next round of BEAR MARKET investing. i have been doing this most of the time since i learn how to invest, regardless of how much the bank is paying for deposit's interest.
    Sorry if we "offended" your sense of value or money-sense.
    Cheers!

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  6. It is true money is rotting.

    For those who are old enough during those days when Singapore was using paper currency.

    Sometime we did receive very old rotten paper currency and smelly too. LOL

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  7. Hi Temperament, no worries as no offense really. I concur that keeping money when opportunities arise is also a 'position' in terms of investing. Low interest doesn;t mean No interest. LOL

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