How long can you leave each pot of money untouched? You should divide your money into that which is needed in the short, medium and long term
It's like viewing your money in the same way as you do food at home – you keep some in a cupboard, some in a fridge and some in a freezer, depending on how quickly you'll need it.
Your "cupboard" is for instant access to cover everyday expenses, and short-term goals, such as buying a new car, or going on holiday. You can use a normal bank account for this and funds should be easy to access.
Then there's a "fridge" for your money needs for between one to three years. This will probably be higher interest savings accounts and shorter term investments for three years where you'll need access but not in the near future.
Finally, there's the "freezer" for longer-term investments for five years or more. This could be more traditional asset-backed investment types, shares, or pensions which really should be left for a longer term to maximise the potential to meet their aims.
