March 6, 2019
Let’s say you just came into some money- an inheritance, a bonus, or maybe this year’s tax refund was more than you expected. Now what?
Don’t blow it. This is your chance to make that money work for you! This goes beyond stashing your cash away in a regular old bank account. We’re going over 7 Ways To Make Your Money Work For You – ways that will continue to benefit you over time!
We know, we know, not the most exciting way to make your money work for you. But if you tackle your debt first, then your money can truly start working for you without distractions. It doesn’t make sense to start investing if you have bad debt you still have to pay off. In reality, you may be paying more interest on a $1,000 balance than you would earn if investing $1,000, so it is smart to tackle that debt and then move on to other tactics that will get your money growing.
Bottom line: By simply getting out of debt, you save money each month on interest payments. This frees up your money to work for you in other ways!
A typical next step once out of debt is to make sure you have all your bases covered regarding your retirement accounts. While you can’t contribute to your 401(k) outside of your payroll, this could be the perfect time to start on an IRA.
There are traditional or Roth IRAs to choose from, just make sure to research which will fit your current and future financial situation. You can contribute to an IRA if you have earned income. There are some restrictions though (profits from the sale of real estate, earned interest, and annuity income don’t count; self-employment income, commissions, and alimony pay do). However, you can use the money received from your income tax return, so that’s a great use for a larger-than-expected tax refund!
Bottom line: Planning for retirement and contributing early and regularly is one of the top ways to make your money work for you. The power of compound interest is a beautiful thing. Check out these graphs on how a 25, 30, and 40-year-old can invest to $1M with compound interest.
This is not something we typically push due to the fact that you can get much higher returns elsewhere. However, a high yield savings account is a great place to keep, say, your emergency fund. It’s better than that money sitting in a regular savings account where it may lose value over time due to inflation. There are a ton of high yield savings accounts out there (especially through online banks) that offering over 2% APY. Just make sure you do your research on factors like the required initial deposit, how often interest is compounded, and minimum balance required.
Bottom line: High yield savings accounts are not going to make you rich. They are, however, a good option to keep your emergency fund in. Check out The 10 Best High Yield Savings Accounts of 2019.
Ah isn’t that the dream? To have enough money coming in regularly where your earned income becomes optional? We live in 2019, there are dozens of ways to earn passive income. 3 types of passive income are business, real estate, and equities. Some examples are dividend investing, investing with a robo-advisor, producing an e-book or e-course, producing something that will generate royalties, renting out a room or a second home, or a blog.
Bottom line: Use your new found cash to lay down the foundation for something that will continue to pay you for much longer! For a cool infographic on which passive income strategy is right for you, click here.
“The best investment you can make is in yourself.” Warren Buffett said this, so obviously it is true! Learning a new, specialized skill or a new language is an amazing way to invest in yourself. The more education you have, the more competitive you become when looking for a job, negotiating a salary, asking for a raise, or securing funds for your own business ideas.
Bottom line: Never stop learning! There are tons of free resources at your fingertips (thank you Google and Youtube) that should be taken advantage of. There are also paid certificates and courses that look great on resumes.
A silent partner invests money into a business and will earn a share of the income the business brings in. This is a great way to make your money work for you. Being a silent partner is appealing to many because it is completely passive. Being a silent partner can bring huge returns, however, if the business underperforms, or even goes under, so does your investment.
Bottom line: Being a silent partner in a business sounds like a dream- it’s passive, you don’t need to be the expert, you don’t need to put in the long hours, you are just the source of money. Just always do research on the company you invest in and make sure you are 100% confident in their long-term success.
Yes, maybe we are biased on this one. But real estate brings true wealth-building opportunities with their high historical returns. By passively investing in real estate through platforms like DiversyFund’s, investors are able to keep their regular jobs or shift their daily focus on another endeavor (aka, they don’t have to be a real estate expert or a landlord). Real estate allows your money to work overtime for you!
Bottom line: You should look into investing in real estate! The DiversyFund Growth REIT is an SEC-regulated Real Estate Investment Trust (REIT) that builds wealth by investing in cash-flowing apartment buildings. Our focus is on long-term capital appreciation from the renovation and repositioning of these multi-family properties. Learn more today!