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While it is always a good idea to have some cash around for emergencies (generally between 3 to 6 months living expenses), consider that 2% to 4% is a very meager return on your deposit. Since the financial markets have always presented the investors with a much higher gains on their investments, most people invariably place a portion of their of their capital in them. The amount of investment varies depending on the taste and risk-tolerance of the individual investor, and as we cover the different investment instruments, you should be able to figure out which ones match your investment goals based on your answers to the above questions.

Regulation

Before going further into investment types and techniques there are a couple of concepts that may need clarification. Perhaps one of the most important issues in any type of investment is regulation. The world of financial investing is so wide and so complicated that without meaningful and forceful regulation, it could easily turn into chaos. Effective regulation assures the investors of integrity and sets the stage for an organized and professional trading process. Without it, the financial markets could open up to wide and dangerous abuse, fraud, and disorder causing the investors to shun them. This is an unfortunate but expected side effect since there is so much money available for abusers, scammers, and racketeers to set up shops and cast their nets to make a lucrative business.

In the US the job of policing the financial markets falls under two categories. First, just about every financial market is equipped with an intelligent and independent regulatory body tasked with tracking and logging every activity that crosses the market. Their main goal is to promote an organized, clean, and fair trading environment for the investors and keep the bad elements at bay. Such regulation, while …