Heres Everything You Need To Know About a Sinking Fund
Paying for these significant expenses can be challenging, but a sinking fund may pave a better way.
We all have something special we’d like to buy for our home or in life.
Sinking funds can be a game changer for individuals and households. It is a valuable tool to add to your financial toolbox for savings.
So why not make your savings work better for you?
What Is A Sinking Fund?
Sinking funds have long been helpful for companies and bondholders to minimize risk.
Many bonds now have a sinking fund managed by a trustee who oversees the fund.
Money is set aside periodically with a trustee for repayment of the portion of the principal.
A Sinking Fund For Your Household
Similarly, you or someone in your family can create a sinking fund, dedicating a savings account for a specific household expense.
With a bit of planning, you can have what you need or want in your life without guilt.
For example, if you have your heart on a particular $1,500 couch within a year, your monthly savings goal is to contribute $125 to the sinking fund each month.
Sinking Fund Vs. Emergency Fund
Both your sinking fund and emergency fund are safety nets but for different purposes.
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