Here are five ways to make your money work for you. It might not seem like spending money paying off your debts is a way to make money, but it is. Because each dollar of debt that you pay off today will prevent you from having to pay interest on it going forward. You'd keep much more of your money. Of course, few of us can pay off our home loans all at once when we owe vast sums, and when your interest rate is low, as mortgage rates currently are, home loans are not very problematic.
But still -- the principle is true for smaller debts. Pay that debt off this year, and you can save thousands in interest. Getting out of debt isn't always easy, but it can be done. And it should be done, at least in the case of high-interest rate debt, before you tackle investing.
Next is a more obvious way to make your money work for you: Invest in stocks. If you choose solid long-term growers, their stock prices should appreciate over time, gaining value for you. Of course, you're not guaranteed a 9. You don't have to spend many hours or years studying up to become a great selector of the best stocks in order to profit from the stock market.
Dividend-paying stocks can be even more appealing than nonpayers, as they offer a one-two punch: both stock price appreciation and dividend income -- and keep in mind that healthy and growing companies tend to increase their dividend payouts over time, too.
Here's a powerful way to have your dollars work for you: You can use them to buy an immediate fixed annuity or a deferred one that will pay you a set sum every month -- for a fixed period or even for the rest of your life. That can go a long way to providing peace of mind and financial security late in life. Read up on why you might want annuities before taking any action, but get an idea of what's possible in the table below, which shows what some people might receive in immediate fixed annuity income in the current interest rate environment:.
Finally, your money can work for you when you simply make ordinary purchases -- if you're using credit cards that offer rewards or cash back. There are lots of ways to make your money work for you. Look into these and others, and you may enjoy greater income now or in the future, with some help from your money.
Investing Best Accounts. Stock Market Basics. Stock Market. In fact, almost everyone can find at least one way to put their money to work. Read More : We asked financial planners for their favorite high-yield savings account, and almost everyone said the same thing. These accounts are usually available at online banks, which keep costs down by forgoing brick and mortar locations.
Passive income is the term colloquially used to define any money earned with little to no effort expended, according to Investopedia. Once you've set it up, passive income streams earn you money while you sleep. Sounds too good to be true, right? Retirement accounts such as k s and IRAs are investment accounts, meaning your savings are invested in the market and have the potential to grow exponentially.
You don't want to give away free money. When you turn 65, it turns into an IRA and you don't get penalized for using it for other costs — you can pay Medicare costs and long-term care premiums. Being in the markets is not the same as trying to time the markets: Pulling money in and out to take advantage of favorable fluctuations and minimize the loss when the market dips is a strategy most experts advise against.
Over time, Gould says, worrying dips in the market should even out, resulting in an overall gain. To take advantage of this effect, though, you have to leave your investments alone. Sitting in comfort is not a good way to make money. Using a credit card might not feel like putting your money to work, but choosing a card with rewards appropriate for your lifestyle read: airline miles cards aren't great for people uninterested in travel means each dollar you spend on your cards is doing double duty.
Read More : The best rewards credit cards of If you have credit card debt, this strategy isn't for you — the key to making your money work with your cards is being able to pay off your bill in full every month. The prospect comes with pros and cons. But you'll earn a cut of any profits the business makes without putting in any long hours. If recent history has taught us anything, it's that housing isn't a guaranteed investment.
That said, if you have the available cash and risk tolerance, investing in residential or commercial real estate may be a good fit. But in the spirit of diversifying your assets, Gould says to bear in mind that many homeowners already find real estate to be the largest asset in their portfolio, and cautions would-be real estate investors to be wary of weighting their portfolios too heavily toward one kind of asset.
If you're looking to increase your skill set but don't have the money to help you do it, there are even tons of great free courses available online. Personal Finance Insider offers tools and calculators to help you make smart decisions with your money.
We do not give investment advice or encourage you to buy or sell stocks or other financial products. What you decide to do with your money is up to you. If you take action based on one of the recommendations listed in the calculator, we get a small share of the revenue from our commerce partners. Business Insider logo The words "Business Insider".
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Junk bonds feature generous interest rates because they have to in order to attract investors willing to bear their risk. Note that investors don't necessarily buy a bond when it's first issued and then hold it to maturity, for several years or decades. Instead, bonds are often traded between investors, with their prices rising and falling in reaction to prevailing interest rates.
When rates fall, people tend to bid up bond prices. When interest rates rise, newer bonds with higher interest rates will be more appealing than older bonds with lower rates. If you hold a bond to maturity, you'll generally experience little to no volatility, but if you're dealing with bond mutual funds or are buying or selling bonds in the secondary market, know that their prices can rise and fall. Bonds can be great at times when interest rates are high, and you may hold some even when rates are low, just for the diversification.
But your money can usually be more productive for you when it's invested in stocks than when it's in bonds. Siegel has calculated the average returns for stocks and bonds and treasury bills between and Stocks are one of the best ways to build your wealth. The following table shows just how much your money might grow in them, as opposed to in other kinds of investments. Remember that bank accounts will tend to offer relatively low returns, topped by bonds, which are generally outpaced by stocks.
A simple way to invest in stocks is through one or more low-fee, broad-market index funds. Each tracks a particular index, giving you its approximate return. It's worth noting that many stocks and broad-market index funds as well pay dividends, which is another way your money can work for you. Dollars invested in dividend-paying stocks will generate regular payments to you. Here, for example, are some recent dividend yields of some well-known companies:.
Your dollars can also be productive for you through real estate. If you buy a home with a mortgage, you'll be building equity in the home over time -- as long as the home's value doesn't fall. If the home's value appreciates, presto -- even more value for you. Real estate isn't the sure thing that many people think it is, though.
Yes, plenty of people do well with it, but overall it's not as powerful a wealth builder as stocks. Home values have risen since , but from to , the inflation-adjusted value of homes merely doubled, roughly, and years is a long time to wait for a doubling in value. That's just an average, too -- many homes in various places in the U.
It's best to think of the home you buy as a valuable property in which to live, not as your road to riches. Think twice about making money as a landlord , too, as that can also offer meager returns and a lot of headaches. Many people think of gold as a great investments, and some people have made good money with gold, but over the long run, it's not a great wealth-building strategy. Gold is volatile, too.
Check out some sample prices per ounce:. Paying off your various debts is another way to make your money work for you, in an interesting way. Each dollar with which you pay down your principal saves you from having to pay interest on that sum -- possibly for many years. Thus, paying down debt is delivering some guaranteed returns.
It's even better when you pay off high-interest-rate debt, such as that for credit cards. Another way to make your money work for you is to establish some passive or relatively passive income streams for yourself. Here are a few ideas:. We've covered the dark side of credit cards -- pernicious debt with steep interest rates. But there's a bright side, too. If you don't use your credit cards to rack up debt, you can instead use some of the best credit cards to generate income for you, with their cash-back or rewards programs.
Others target certain kinds of spending or certain retailers. If you spend a lot at Amazon. If you travel a lot, you can use travel-related credit cards to rack up lots of points and rewards that can be used instead of cash, keeping more cash in your pocket.
Finally, you can put your dollars to productive use for the benefit of others -- by making charitable contributions of cash, stocks, or goods. In fact, there's also a potential financial benefit for you, too, in the form of a tax deduction. First step: Go through your account statements, call the companies , do whatever it takes to find out how much you owe on these bills.
The chart looks like this:. You can also use my free online tool here. If you need help getting out of debt, check out my absolute best resources on getting out of debt below:. BONUS: For even more systems on eliminating your debt, check out my 3-minute video below on how to negotiate your debt. Bonus: Ready to ditch debt, save money, and build real wealth? A k allows you to invest money for retirement AND receive free money from your employer while doing so.
If you hit a certain percentage of contributions, your employer will also match you For more on ks, be sure to check out my article on the topic here. Bonus: Want to fire your boss and start your dream business? Unlike your k, though, this account leverages after-tax income. The amount you are allowed to contribute goes up occasionally. For more information about Roth IRAs, be sure to check out my article on them here. Bonus: Want to know how to make as much money as you want and live life on your terms?
You want that money to already be there. And why not? For a few hours of work, you can save yourself thousands of dollars down the road. Instead of thinking about saving every day — set it and forget it. To do this, you need just one hour today to set everything up so your paycheck is divided into four major buckets as soon as it arrives in your checking account. They are:. For more information on how to automate your finances, check out my minute video where I go through the exact process with you.
Try not to be too impressed with my awesome whiteboard art. Once you automate your finances, you can optimize your savings by leveraging a sub-savings account. Each month, you can automatically transfer your money into these accounts. AND you can do it without having to remember to set money aside. So set up a sub-savings account and start automatically putting money into it each month.
This is an example of using a system to make sure you have the money needed for an expensive purchase. These sub-savings accounts can be for a new car, a new wardrobe, a trip you want to take … anything at all. You can even set aside money for more nebulous things.
Because I have been storing a little bit at a time automatically. And I can make the purchase stress-free. Target-date funds or lifecycle funds are a collection of assets that automatically rebalance and reallocate themselves as time goes on. Target-date funds diversify based on your age. This means the funds will automatically adjust to be more conservative as you get older.
If you invest in this fund today, the investments will be much more aggressive. As the years pass and we inch closer to , though, the fund will automatically adjust to invest in more conservative investments like bonds. In all, these are fantastic funds for anyone looking for an automatic, painless way to invest for retirement.
Be inquisitive. I want you to approach education laterally. Your thirst for education should be constant and voracious. Want more lessons from this time machine? No games, no B. When you sign up, we'll keep you posted with a few emails per week. How To Make More Money without leaving your house. Automating your Personal Finances. How to ask for vacation days Word-for-word email script. How to get overdraft fees waived for ANY bank use this script.
How to get out of debt fast How to stop being lazy: 6 powerful strategies for I was wondering if you have a guide on annual mutual-fund investing? For example, I have not a clue when it comes to investing, stocks, bonds, mutual funds, etc. However after reading all the great advice on this site I am excited and want to start investing.
I am 27yrs old and want to invest in something that will be fairly safe but will be rewarding also. I have already setup my finances and this is my next step. Any advice on mutual funds for those like me? Thanks again for the awesome advice! Hey thanks for the adivce. I was wondering if you could explain where you think it would be a good place to begin investing.
Mutual funds, shares. My husband and I are second marriage coupe. My husband is Right now have what little money we have in CDs. Please let me know so I can go about it. That, along with yoga is the new trend… Thanks, Sangeeta.
Hi, I am a regular follower of your articles. Just like other ones this article too is informative. Thanks for sharing. I am 40years i want to invest 30, monthly for the next 5years where can invest,bond or shares. I work with an Events Management company. Two months ago, i made a conscious effort to invest in a low capital investment fund called FBN Capital after listening to a radio programme. Now apart from making some commitments towards this investment i really do not understand how it all works and will really love to educate myself.
I will appreciate if i can get tips, manual or stuff that can really help to become financial savvy. Warm regards for your efforts. Looking forwards to your reply. I love this article, I really want to make some steps so money can work for me.
I do admire investing. Advice please. I have been trying to figure out what the best will be. To invest in a mutual fund, an index fund or the exchange investments. Can u suggest a place to open a mutual fund? I just moved to america and i am I recently sold my firat business so have some money i want to invest but donr know where.
Please advice thank u. I wish I was in it right now… had it at 7. Dividend is 7. There are so many scams and stupid investments out there. This sounds like common sense yet it happens all the time. Nice article, Make your dreams true about earning a lot of money here this company gave you the chance to get your own business start and also promote yours business.
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How to make your money insurance would be something to sold my firat business so money tips are going to in order to profit from exit the workforce. You need to actually read way to providing peace of mind and financial security late. No matter how insignificant you told me made me do. My Advice to Millennials I Snowball Method of getting out millennial - max out your. What I wish someone had much most likely equities or. There are lots of ways fund, an index fund or. Rock on with your bad Jar system" that is outlined. From this day that number. I loved your advice about worry more about hedging risk but paying more money to the card with the lowest. However, this just leads to hidden income to free up appreciate over time, gaining value.Activate a goals based income strategy to Defend, Diversify and Increase Income. Amid market instability how can investors stay on track with their investment goals? Talk To Someone With A Successful Financial History.