Question

What key roles does money play? If you were to suddenly come into $100,000, how would you invest it?

Answer 1

Money has the following four key roles:

• Unit of account: The value of all economic outputs, be it goods or services, can be expressed in terms of money.
• The medium of exchange: Money facilitates the exchange of goods and services as the price of all goods and services can be measured in terms of money.
• Store of value: Money helps in storing all values created through the production of goods and services.
• A standard of deferred payment: Money helps in preserving surplus purchasing power for future use.

If I get $100,000 suddenly, I would invest the same in educating myself and acquire new skills which would increase my employability and future earning potential. I think this would be the best investment opportunity for me as I would get a very significant return in terms of higher future income.