Two savings accounts: For savings and investments

One savings account means responsibility. Two savings accounts mean an advantage for investing. Especially if you break the established rules.

The savings account is used to defer the available financial reserve. Its amount depends on a number of factors. It should be at least three times the monthly expenses. There are countless tricks and procedures for investigating the required volume. Savings at the appropriate level provide a higher internal level of satisfaction. So much for the issue of savings account and financial reserve. And how does the second account suitable for savings relate to this?

Market timing

The second saver is used for the much-recommended market timing that is associated with investing. Most often in open-end mutual funds or investment certificates.

This dark practice is intended for more experienced shareholders who know the funds in which they invest. The longer you have something to do with them, the better. Ideally from a five-year time horizon. It is advisable to know the minimum and maximum historical values ​​for a unit certificate. Both in times of abundance, ie when prices are at their maximum and at the same time in bad times. This knowledge can also be replaced by studying history on the websites of investment companies.

Accumulation of money on the twin

The second savings account is used primarily for the accumulation of funds for quick purchases of unit certificates in which the capital markets are down. At the same time, there is an opportunity for high-yield deals in a relatively short time. To be ready, it is advisable to keep a sufficient reserve in the second savings account, which you can use at any time to buy cheap unit certificates.

The principle of the transaction

The operation is based on the business cliché buy cheap, sell expensive. The subject of the transaction is unit certificates. We will use a brief example to understand.

The value of the XY fund’s unit certificate is around one crown in times of economic downturn. Following the collapse of the markets, the unit price per sheet will be halved. As soon as this happens, you will buy two shares for a crown. Then you wait for the markets to calm down and watch the value of the units approach the normal norm. In our case to the crown. If the right time comes, it is advisable to sell the entire portfolio and deposit the money back into the savings account. Repeat the whole process as you wish. This practice can be comfortably repeated twice in a decade. With each rise and fall, you get more money, which you invest in more and more units and wait for their value to increase naturally.

And how does the second savings account relate to the process? For the continuous postponement of smaller amounts in favorable times, when it is not important to buy unit certificates as they reach their maximum.

It is necessary to observe the diversification of funds in both accounts. By transferring money from an account where you hold a reserve towards investments, you will complicate your financial stability. The loss of justice is entirely appropriate in the case of cheap purchases. Keep in mind that this procedure may not always be used.