Do you have money sitting around without a purpose? We’ll explain the dangers of lazy money, why people have it, and how you can put it to work! Make your money work for you as you plan for retirement.
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[0:46] What Is “Lazy Money”?
- Lazy money is money that isn’t working; it isn’t making money or doing anything for except existing.
- Money markets and savings accounts are considered lazy money.
- A lot of people think they need liquidity for a rainy day.
- There are three basic things money can do for you and you only get to pick two: safety, liquidity, and growth.
- Liquidity changes when you get closer to retirement.
[4:33] Why Do People Have Lazy Money?
- Aside from an emergency fund, some people lack a financial plan to give their money purpose.
- In 2008, people got burned. Now they’re scared to put their money into the market.
- You need to have a balance between risk and safety in your portfolio.
[6:25] How Do You Put Lazy Money to Work?
- There are three worlds of money: safety, growth opportunity, and linked. Each world consists of certain products, services, and companies.
- In safety: banks, government, and insurance companies.
- In growth: mutual funds, stocks, bonds, real estate investments, and variable annuities.
- In between those two worlds is a linked world that features instruments that focus on protection but are linked to growth. There are restrictions on what you can do with this money, but it’s a way to put your lazy money to work.