TYPES OF SAVINGS

There are mainly four types of savings and those savings are:

Emergency reserve fund, Accumulation fund, Long-term investments, and college education savings. But in this article we will address only three types of savings .

The first type of savings :An Emergency reserve fund is used for emergencies and to replenish but an Accumulation fund is used for unexpected large expenditure or major purchases. And mainly Long-term investments are used for family security, inheritance and retirement.

Emergency reserve fund:

An Emergency reserve fund is not part of accumulation fund or long-term investment portfolio rather it is managed differently.Every family should have a emergency reserve fund which will protect them from unexpected expenditure.

We should place the emergency reserve fund where the money is kept safely and where it can be easily converted into cash where the early withdrawal penalty is not needed.So , there are three primary options which is used for housing an emergency reserve account.They are banks, credit unions, and money market mutual funds.