How to Allocate Your Money for Investing

I am recently researching into various ways to allocate one's funds for investing.

There is a book -"I Will Teach You To Be Rich" with an accompanying Blog with the same name at
http://www.iwillteachyoutoberich.com/blog/

advocates allocating your funds this way

• Short-term account

This is money that will e spent within the next 12 months.

So if you were to save about 10% of your monthly paycheck, you may need to allocate a percentage of that 10% into the three accounts. Take for example, a person who saves $1000 per month, he may need to allocate $300 to his short-term account to pay for forthcoming expenses like an upcoming wedding gift, travels in the year or for some 'unexpected ' expenses that may come up.

• Mid-term account 

This accounts is allocated for funds that will be needed within the next 3-5 years.

Your mid-term account is an account which will help you grow your wealth as well. 

Since these are funds you only need within the next 3 to 5 years, you can use these funds to invest in bonds, preference shares or currencies to earn higer interest.Again, you may allocate 30& of your savings to this account.

• Long term savings

Long term savings as the terms suggest is allocated to funds that you will need only 10 years or more down the road.  You can afford to invest in equities, preference shares, REITs and other investment vehicles that have a longer investment horizon but yield higher returns. Your long term savings are used for a down payment for a house, your desired vacation with your family, etc, etc etc.

This is another method of allocating your savings besides the investment approach used in the previous post.