Sunday, February 03, 2008

Savings for the short term and long term

From your monthly income, you have to pay the expenses. You should keep the remainder as savings for the future.

For the short term savings, you have to keep in a savings or current account. You may have to make certain large payments during the year, for example, expenses for the start of the school year, payment of taxes, etc. This can come out of your bank account.

You can set aside a part of your savings for the long term. This should be invested to earn a high rate of return, e.g. in an investment fund. As the flow of your future savings is uncertain, you should avoid investing in an inflexible financial contract that have a large upfront charge or imposes a penalty on early termination.

Read this FAQ:
http://www.tankinlian.com/faq/savings.html

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