Saving Money – Long Term

Long term savings is just as important as short-term and mid-term.  The use of this money will be for different purposes, however.

Temporary Income Replacement. If you are off with an illness for a significant period of time, you will have to be placed on short-term or long-term disability.  This source of money does not normally cover the full amount of your income.  So, you need a source of money to cover the remainder.  That’s where a long-term savings account can help.  We are speaking of an illness that keeps you out of work for more than three months.

Down Payments. If you find that you want to purchase another house, build, or buy property, this long-term savings account can fund those situations nicely.  Whichever scenario you chose to use, this money will help you knock down the amount of interest you pay over the life of a mortgage.  Also, your monthly payments will be lower as well.  Hopefully, then you can afford to make payments on the principle in addition to your regular payments which will escort you to full ownership even quicker.

Long-term savings approaches the area of investing, with this exception:  funds availability.  A Certificate of Deposit or CD is a good vehicle for this type of savings.  The idea being to choose a type of savings account that will have a higher yield in interest for your money.  Investing does not normally give you this.  If your money is tied up in stocks, bonds or mutual funds, getting to it may be difficult.

Pay particular attention to the interest rate that you are earning.  Make sure you choose a bank that offers a high rate.  If you have planned and executed your smaller savings vehicles correctly, then you will not need the instant access to these funds.

The amount that you place into this savings account will depend on what your income will allow, and what you believe will be your needs in the future.  If you are younger, you might not need to have a lot in this account.  A small amount like $10,000.00 is a good starting figure.  That would also be a goodly amount to apply as a down payment on a first house.  If you are older, this amount would be nice in case you find that you need to make a change in living quarters in order to prepare for retirement.