Short-term Earnings Or Long-term Profits?

First of All - Why Should You Invest?

The economic system we live in is constructed in such a way that most people live paycheck to paycheck.

This goes both for middle-class and lower-middle class, not to mention people living in poverty.

Even if you work hard, even if you work 2 or 3 jobs at a time, you still most probably won’t be able to save a decent sum of money to put away for medical emergencies, for your children’s education, or for retirement.

Not to mention being able to buy that car you’ve been dreaming of since childhood, or that vacation home in Spain you’ve had your eyes on for years.

So after you thought a little bit about how you can save some money, you’re considering opening a savings account with your bank. You also have some cash that you keep at home, just in case.

Some experts think that keeping around $1,000 in cash at home is enough, while others recommend an amount between $2,000 and $3,000, although that could be considered a little high for some people.

If you want to understand what the best number would be for you, you should calculate your estimated monthly expenses and multiply it by 3 to 6 months, so that in case you have to change homes or you lose your job, you have a safety net that can support you until things become clearer.

Still, there are some risks of keeping cash at home or in your wallet. First of all, it might get stolen, and recovering stolen cash is really difficult. Second, cash, especially paper money, is vulnerable, since it can get wet or burnt. Third, money kept at home doesn’t earn interest. Besides, due to inflation, your money does not even keep its value, but loses it instead, so at the moment you decide to use your cash that you keep at home, you will be able to buy less than you can buy now.

Keeping money in a savings account with your bank can be a solution, but the interest rate you get paid for it is so low, that it does not even cover the inflation rate, so you still lose money.