The nest egg refers to money set aside in investment, money market, or savings accounts that is designated for some specific purpose. It may also be called a financial cushion, a safety valve, and a variety of other names. Some refer to retirement money specifically as their nest egg, and others have money set aside to later fund their children’s expenses like college, weddings or even down payments on a house.
In order for nest egg philosophy to work, you must agree with yourself that nest eggs aren’t touched except for their intended purpose. It also helps to set aside an amount you plan to “feather the nest” with each month. In real life, when you find a nest, you are never supposed to touch the eggs, since birds may then reject them. Your nest egg should remain safe and untouchable, allowed to grow quietly in the background until it is needed for its intended purpose.
It’s still important if you plan to invest your nest egg, to carefully consider the types of investments you can make. In general, you don’t want high-risk investments if you plan to invest this money, since you don’t want the balance of your nest egg to reduce. Instead, you may want to look for steady money making investments, which will increase your balance minimally, without the risk of losing the money. Bonds, savings accounts, and relatively stable mutual funds may not be the splashy potential moneymakers that quick stock or commodities purchases are, but they usually don’t lose money either.
Usually the term nest egg implies slow growth of money, securely stashed away. They don’t imply quick dabs at making huge amounts of money. In general, those investments that might make you the most amount of money also offer the highest risk.
Financial advisers don’t always agree on how much money is suitable for nest eggs. Obviously the more money you can put into one, the better. If you have significant amounts of money to invest, you may want to diversify your investments. Invest some of the money in higher risk but higher potential profit stocks, and invest some in stable moneymakers. The amount you choose to place in a nest egg really depends on how much you can invest, and what the “egg” is for. It can help to seek financial counseling to make the best decisions regarding where to safely place your money to maximize profit and minimize loss.