Why do we hold money than other asserts?
The value of money and the price level is the investment purpose. If this question rises, how do you intend to answer it, why do we hold money than other asserts? I made this article for you to know the reason why we hold money. Before I begin to go further,I will like to give you a hint of the meaning of value of money.
Value of money; it simply means the quantity of good and services a given amount of money can purchase.
Reason why people hold money than other asserts
There are major motives why many people desire to hold money for themselves, such as transaction motive, precautionary motive and speculative motive.
People desire and began to hold money for day to day activities or transaction,such as getting there daily need,like food stuff and other related things that can be use in there house When you are keeping money for day to day activities,it’s known as transaction motive of holding money. This is the one of the reason why many people desire to hold money, they hold it in other satisfy there daily needs. Now when people received there monthly salaries, they always keep some of the income,the reason for keeping it is to meet up with there daily needs.
Precautionary motive is the desire to hold money for unforseen circumstances,they may occur at any time, such as sickness and accident. Uncertainties are the reality of life. So no one can know the payment that we may make in the future, so it is very important to keep money for unforeseen circumstances that may occur in future, it is a good way to plan our life. Among the reason why people hold money ,precautionary motive is the one of the important reason why we should hold money. Now this is the last but not the least which is speculative motive.
The speculative motive is a business Motives it refers to a desire to hold money, and they hope to give it out with a good interest at this point when someone has money he needs to wait for sometimes then when he will give it out he needs to checkment the current price of money for example let’s use USA Dollars as an example you can keep it now maybe in next 3 months,the value of USD can increases or decreases, then when it increases now you are in gain, now when you hold the money for future gain,it is a speculative way of holding money. Many people have learnt this speculative way of holding money because currently many people are saving a different currencies most especially bitcoin currencies because it is acceptable it is now a digital currency so people has become to save bitcoin for the future because they believe that in future time to come this very coin Will has a maximum value and increase to the extent, now when this time reaches those that saved their bitcoin currency will be in again,I mean in a huge profit.
Holding money it is very important let’s Learn how to hold money most especially speculative Motives precautionary motives and also transaction motives this is the reason why people continue to hold money I know some people invest money as well.
Thank you for reading this article today and I hope you learnt a lot of things, I know that this article is effective you must know and understand the reason why you should hold money.
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