B.  Safety Money:

These are funds needed to meet life’s unexpected turns.  Normally, safety monies protect whatever real assets you have accumulated in the past like your home for instance.  In this regard, fire insurance will be the best investment option to protect this type of asset.  General liability insurances can protect your business from unexpected developments.  However, while there is a need to protect your assets, it is even more important to protect the person that generates these assets.  This is where life insurance comes in. 

 C.  Freedom Money:

While it is important to save and invest for your future, it is equally important to have funds that you can use for your non-basic needs.  These are funds for activities that give you enjoyment and fulfillment.  After all, life does not start after retirement.  It started on the day that you were borne.  Certain activities like having dinner with old friends or going to the mall with your kids, or that all-important annual family vacation should not be disregarded in order to save for long-term needs.  We need to keep in mind that God did not put in this world to make a living but rather to make a life.  However, these activities will have substantial price tags attached to them and therefore it is important to actually prepare for them.  For this purpose, short term instruments like savings and checking accounts, treasury bills and money market funds will be your be your best options.

 Another life goal that gives you fulfillment and a high sense of security is home ownership.  This is probably one of the biggest single expense that you will incur in your lifetime.  Home mortgages can play a vital role for this purpose.  However, you need to keep in mind that borrowing money from the bank will require you to put up approximately 20% of the value of the property and this not going to be a small amount.  Therefore, it is an excellent idea to plan for this activity several years in advance so you can save for the banks equity requirement.  Medium to long-term instruments like mutual funds, government or corporate bonds will be the best option to maximize on this type of savings.

To be continued . . .

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