Money in Motion
I always encourage people to take a holistic view on any situation. This thinking may apply to your entire life, your career, and of course the management of your wealth. On this topic, a critical point is to keep your money in motion.
Money that lies still and is not able to move about does not create new wealth through cash flow. By just staying put it is not able to serve more than one purpose. This principle applies equally to individuals and the economy in general. When money flows freely within a country, the economy booms. When it stops flowing, as in the 2008 credit crunch, we are quickly in a recession. The banks also use this concept to their advantage. They are very happy to give you 3% on your GIC and then loan your money right back out to someone else at 8%.
Your GIC is not the only place where your money becomes illiquid. A parcel of undeveloped land, a home, an annuity, and a long bond are all examples of assets that serve only one purpose. In order to get the most out of your money, you should ensure that your money is in constant motion so that it doesn’t become stagnant and cause you to lose opportunities to enhance returns.
