Quora Answer: Is It Problematic That Investors Have Their Money in Many Different Places?

The following is my answer to a Quora question: “Is it an annoyance or problem, that people who invest, have their money at so many different places?”

If you manage your funds well enough, that should not be a problem.  Firstly, you need funds that are immediately available.  This is a why a KYC is very important.  You need to know the amount always needed on hand to address anticipated expenses, and that includes entertainment.

Secondly, you need funds that are sufficiently liquid for expenditure that may arise.  This also includes planned expenditure that exceeds your liquid cash and equivalent budget.  This might be the purchase of a large ticket item, property or an extended vacation.  If you are constantly dipping into these funds, then you need to redo your accounts and adjust accordingly.  You are not putting enough money aside for your immediate expenses.  The advantage of not having these funds immediately available is that they preclude impulse spending.

And finally, comes the various types of investments over an extended horizon, ether medium or long.  Here liquidity is not the main concern; return on investment is.  Unless there is a real reason, such as an emergency, you should not be touching these funds for frivolous reasons.

Putting your investments in different places is not only a sound strategy, but a basic principle.  This is the adage of not putting your eggs on one basket.  The idea is to diminish the risk by spreading investments across various instruments, markets and sectors.  That way, if one portion of the market experiences a correction or a downturn, you have not lost all your wealth.