Chapter 06 · Beginner · 5 min read
Match the money to the timeline
Cash for soon, markets for later
The one rule that decides whether money belongs in savings or investments.
Sort goals by date
Money you need within roughly three years usually belongs in cash or very low-risk savings. A deposit you need next spring should not depend on a good quarter.
Money you won't touch for five years or more is where investing earns its keep, because you can sit through the bad stretches.
Name your pots
Naming a savings pot 'Japan trip' or 'deposit' makes it far less likely to leak. Most banks let you split accounts for free.
Then pick the wrapper
Only after the timeline is set does the product matter — a savings account, an ISA, a pension or a general investment account, depending on your country.
Words worth knowing
Open dictionary- Time horizon
- How long until you need the money.
- Volatility
- How much a value bounces up and down along the way.
- Tax wrapper
- An account type with specific tax treatment, like a UK ISA.
Money needed in about a year should usually sit where?
Try it yourself
List three goals with a date next to each, then mark them cash or invest.
Can you spot it?
A house deposit needed in 14 months sits in a stock fund. What risk has been taken on?