An Overview of the Transactional and Speculative Motives
This post will help you further your understanding of the different motives for holding money, as part of your Prelim Economics syllabus. Individuals hold money for different motives, including transactional motives and speculative motives.
- The transactional motive refers to individuals holding money for the sake of buying goods and services to improve their quality of life.
- The speculative motive refers to the desire to hold money for the purpose of investing and growing wealth over time.
The video below looks at these two motives in more detail.