According to an article i just read (Keep less money in bank, business world, Jan 17), while it is ok to save for a rainy day, keeping too much cash in the bank is not such a wise investment.
In the article, Jeffery Chiew Kim Chwee, Asian Chairman of the International Association of Registered Financial Consultants (IARFC) said that it is not wise for people to keep all their cah in the bank as it will only erroded by inflation, or the increase in the general price level of goods and services.
Hmmm, the article has a point. Money kept in banks earn a measly 3% annually as compared to other financial investment. Let us say you saved 10,000 five years ago and that amount can buy the lasted nokia celphone. Even if your savings reached 15,000 today, it is not enough to pay for the lastest nokia / erission celphone in the market. But if you were able to invest the 10,000 in a business, it could have earned even more.
It is not bad to save... in fact it is wise practice to have at 3 to 6 months worth of income saved up for emergency use. Having this "buffer" account give one a sense of security and enhances one's image / character to creditors or other business transaction.
But keeping all your eggs in one basket is a risky deal too. It is wise to spread the amount / investment into banks, real estate, jewelries or secruities. I tend to have 3 bank accounts (one for bill payments - checking account, one for savings and emergency fund and another for treats/ monthly expenses and allowance). This way, i could balance my meager government income. :) I am also trying to invest in real estate and hopefully fullfill my dream of being a home owner someday.
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