What Are The Three Types Of Motives For Holding Money

Peoples hold money/ cash for the three (3) following reasons or motives. Lets explain the motives for holding money.

What Are Three Types Of Motives?

1. Transaction Motive

Peoples keep cash for the transaction motive. Everybody maintains cash balance to meet the daily transaction to pay to the creditor, to buy goods and services, pay rent and to invest on business etc. It is somehow one kind of biological motives.

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2. Speculative Motive

Some people hold money for the speculation purpose. Speculator always searches the project to invest money temporarily so that makes the huge profit immediately. A speculator always maintains a cash balance to get the speculation benefits and outcomes.

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1. The Demand For Money.
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3. Precautionary Motive

We all know that the future is always uncertain. So everybody holds money and maintain a cash balance for the future uncertainty. The increase of business or individuals, all’s future is really uncertain, so they keep cash to meet the future uncertainty risks to overcome. A little bit related to physiological motives.

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You will get lots of answers in online about what are the three types of motives. But, these are the best and mostly used motives for holding money definition. We are looking for your warm comment. Share this with your friends. Stay well and be safe.