23rd June 2011, 06:54 PM
Ways to "Park Value"?
Money is a really vague concept. I always tend to understand money as a way to "park value". Similar to parking a car and later using it whenever we want, an easy way to park value would be in the form of fiat currency.
Here are a few "primary ways" we can park value in. For example, inflation can be understood as "de-valuation" of fiat currency relative to commodities like gold.
1) Very short term
- Fiat currency
2) Short term to long term.
- Debt (Bonds/ Debentures)
- Commodities (Gold etc)
- Real estate
- Skills & Knowledge (via education)
There are many derivatives of the above which I have not included in the list such as say
Mutual funds - Derived from equity, bonds.
Money market instruments - Derived from bonds.
Foreign exchange - Derived from fiat currency.
ULIPS - Derived from equity, bonds, insurance.
Futures & Options - Derived from equity.
Mortgage-backed securities - Derived from bonds and real estate.
The derivatives list goes on.
However, if you know of any other primary ways to park value, you are welcome to post.