Where Do We Put our Money Now?

Recession is not a desirable word but it has become a byword in every conversation. Because of its far-reaching effect on our ability to earn, it has scared us to the point of tightening our hold on our money. Where we use to spend every cent in our pocket, we now put our decision on hold as we try to search the right reasons for our spending.

But tightening our grip assumes a different tack when we talk about money placed in investments and other accumulation forms. As stock markets plunge and more businesses and investments collapse, we cannot simply watch as our money melts before our eyes. And even before we make an impulsive decision to liquidate that investment certificate, we must, first of all, know where to put our money if we do.

Cash at home. Logic dictates that we should only keep so much at home, even if our home is a virtual fortress with no windows. We should keep only an amount enough for a few days' needs and for minor emergencies.

Deposit accounts. The banks are the next natural destinations for anything in excess. We can put some amounts in savings accounts and the rest in time deposits to maximize our interest earnings. Let us also be careful in choosing our banks.

Insurance policies. The recession has actually pushed us to a serious review of our "face value." Experts in financial planning suggest to focus seriously on our topmost foundational needs, known as the PEP needs - protection for the family, education for the cildren and pension for us in our old age. Let us be sure that these needs are fully addressed before any other need or want is considered.

Mutual funds, variable contracts and UITFs. These three investment forms have a flexibility that will suit any kind of investor. These funds are pooled funds from small and medium investors whose combined contributions allow their fund managers to engage in umbrella investments in stocks, bonds and real estate. The flexibility comes in the choices among low risk, medium risk and high risk packages.

Real estate. Real estate remains a favorite accumulation form because of its physical nature and its ability to appreciate naturally over a period of time.

There are other destinations for our money, such as bonds, stocks, business ventures, commodities, art, hedge and other high-yielding forms, but we temper their inclusion here because these destinations go against our present financial cautiousness. If financial options are wide, opportunities abound for the astute investor, even in a down economy.
The key is to so spread our investments wisely such that our allocation serves us well whichever way the economy goes. If the economy is good, we accumulate enough; if the economy turns sour, we preserve enough.