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Money Matters
9 Smart Ways to Make Your Money Work for You
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Marissa Taffer
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If you’re anything like me, you’ve been hearing more and more about passive income and diversifying your revenue streams. For many entrepreneurs, it's easier for them to have their hands in a few different pots at a time. What about 9 to 5ers? If you have a set schedule and a set income, you can still make your money work for you.

It may seem overwhelming to think about researching additional revenue streams and working to get them set up, so we've researched ways to make your dollar work harder AND smarter, so you can spend less time working and more time enjoying the returns on your investments. Extra vacation next year anyone? 

What does it mean to make your money work for you?

To put it simply, making your money work for you means that you’re earning more money without having to work more hours or take another job. Some people call this passive income. 

There are many ways to earn passive income, including investments, interest and running online businesses. We looked at some of the most popular ways and the pros and cons of each. While some of these methods of making your money work for you require research or legwork upfront, all of them should be less demanding than getting a second job. The other important disclaimer is that return on investments is not guaranteed, and you should make sure to do your due diligence before investing your hard-earned money. There are many stories of trusting people getting taken advantage of or worse, ending up in a Ponzi scheme. While there are some laws in place now to protect people from this, litigation can also be costly and expensive, so heed our warnings and invest at your own risk! 

9 Ways to make your money work for you.

1. Open a high-yield savings account.

This is one of the easiest ways to get more out of your money. High-yield savings accounts currently have interest rates ranging from 0.85% up to 2.2%. The annual percentage yield will vary from bank to bank. You will need to do your research before you choose an account. Be sure that you understand the minimum balance you’ll need to maintain to get the maximum amount of interest, the number of times you can withdraw money without penalty and any fees associated with maintaining the account. While this sounds a bit tedious, your money will be able to work harder for you if you have a full understanding of how to leverage the account

2. Consider a CD or money market account.

While you may need to leave your money in these accounts for months or even years to avoid paying a penalty, they do have higher interest rates. Currently, some five-year CDs will pay as much as 4-5% interest. These accounts are typically lower-risk than buying stocks but can be less rewarding in the long term. With a CD or Money Market, you should know exactly what the return on your investment will be if you follow all the rules and leave your money where you need to for the indicated amount of time. If the idea of not being able to touch your money for five years scares you, consider starting with a six-month or one year CD. 

3. Invest in the stock market.

With the current coronavirus pandemic, the markets have been down lately. While this may not seem like the best time to invest in the stock market, you still might want to consider it as part of your long term strategy. If you’ve never invested before, do your homework first. Learn about your options and the risks and benefits of each strategy. Consider how much money you want to invest and how much risk you can tolerate. If you are risk-averse, you can start slowly or more conservatively.  You may want to hire a pro to help you manage your investment strategy. Before you do this, consider the cost of an advisor. Some charge a flat fee, while others charge a percentage of the money they’re managing. Read the fine print on any agreement, and make sure you understand the scope of services and how long you’re tied to the person you are working with. 

4. Invest in real estate.

It's easier to do this now than ever before. There are many ways to invest in the real estate market. For example, you could try your hand at “flipping houses.” That means buying a house that needs a lot of work at a lower cost and fixing it up. You’d then sell it for significantly more then you paid for it. This is a more active way of getting involved, but there are many others. You could rent out an investment property and turn a profit, list a room or apartment (or apartments) through AirBnB for a shorter-term rental or purchase property and hope someone wants to buy it from you to develop. The amount of profit you can expect to make will vary depending on where you chose to buy and sell the property and when, so you'll want to do your homework and find an area that's up and coming. That way, you'll have a better chance of turning a hefty profit.  

5. Invest in a business. 

There are many ways to invest in a business: you could purchase a franchise or invest in someone else’s business. Just be careful not to sink your hard-earned cash into a business that's going to fail. To reduce this risk, make sure that you do your due diligence. Ask to see financial records, projections and business plans. You might need to sign a nondisclosure agreement first, but it will often be worth it. You also may want to engage a lawyer to make sure you're protected if the business goes bankrupt or gets sued or other legal issues arise. If you are going to invest as a silent partner, understand what this means and if you're signing away your rights to provide feedback on business progress or make recommendations. 

6. Create an online course.

While this may be a heavier lift then investing, it can pay off for a long time. Once you set up your course and sales page, there will be little management that you need to do. To boost your sales, you can build an email list, send targeted emails and advertise on social media. While this may seem like a lot of work initially, if your course is priced right, you can make money for months or even years from the same content.  Create a course on a topic you have deep expertise in or passion for. This will make the workload lighter since you won’t need to do as much research! 

7. Sell unwanted items.

Have a dress lying around that you bought for a special occasion and never wore? How about those really expensive jeans or the shoes that just don’t fit right? If you’ve spent money on things that are lying around your house or closet taking up space, it might be time to consider selling them. It's easier than ever to turn clothes and household items into cash. 

Websites like Poshmark, Mercari and eBay make it easy to sell online without having to meet up with a buyer. While it can take a little bit of time to get good photos and list your items as well as package and send items once they’re sold, it's a great way to make some extra cash and give your items a second life once you’re done with them. Don’t forget, these platforms may charge a fee to sell on them, so understand the fee structure and how much you can expect to earn before you settle on a platform and start selling. Some platforms are mainly for clothes, while others will let you sell anything. Choose what makes the most sense for you. 

8. Contribute to your 401(k) (and take advantage of any matches). 

If you have a 401(k) through your employer, you’ll want to take advantage of it as soon as you can make contributions. The amount you contribute will vary up to the legal limit. Some companies will match a percentage of your contribution. This is literally free money that you’ll have access to later. If you’re younger, you should contribute the minimum amount you need to get the maximum amount of free money. If your company doesn’t offer a 401(k) or if you're self-employed, you may still want to consider a retirement fund. Speak with a financial advisor about the options that may be available to you. While you may not be able to get a match, you’ll at least get a jump on saving for your retirement. 

9. Eliminate your debt.

If you have debt, whether from college, credit cards or any other source, you’re probably paying a lot of interest. Start with your highest interest debt and pay it off as fast as you can. Don't make minimum payments on credit cards — this will make it more difficult to pay them off in full. For instance, if you have $6,288 on a Chase Sapphire Preferred card and you pay only the minimum each month ($39) and don’t make additional charges on the card, you'll be paying this card off for 18 years. Over the course of 18 years, you'll pay $14,299. This is absolutely crazy! You’ll pay double what you owe, and it will take almost two decades to pay it all the way off. The sooner you pay off any debt, the less interest you'll pay. This will let you keep more of your hard-earned money in your pocket and allow you to use it for other, more important things.

FAQs.

1. What should I do to start making money?

You can make your money any way you want. Do you have education or skills that are in demand? If you can secure a job that will pay you enough to cover all of your bills and leave some money for investing, you’re in good shape. If not, you could start with a small amount of cash and invest it. As your money grows, you can continue to invest more and more of your profits however you choose. Eventually, you'll have a diverse portfolio of investments.  What you choose to invest in is up to you. If you don’t want to work a full-time job, you'll need to plan your investments so you have money to live on and aren’t racking up additional debt. 

2. What can I invest in to make money fast?

This will depend on how fast you want to make your money. You can invest in stocks that can increase in value quickly. This strategy is not foolproof —  if it were, everyone would do it. If you can stomach the increased risk, you can follow an aggressive investment strategy to try to bring in money quickly.  

3. How can I double my money? 

If you want to double your money, you can make a plan to take calculated risks when it comes to investment. Set a goal for how much time you're giving yourself to double your money, and work with a financial advisor on a plan to get there. You won't be able to double your money overnight (unless you win the lottery). 

4. How do I know if an investment is safe? 

You'll want to work with a pro. Choose a fiduciary advisor or someone who is legally bound to work in your best interest. While many investments may be relatively safe, there are some that won't be particularly lucrative. You'll want to find someone who can guide you through the process and find you investment opportunities that are not only safe but also aligned with your risk tolerance and your goals. 

5. How do I find a financial advisor? 

There are a ton of financial advisors out there, but how do you know which one is right for you? Try asking for a referral from a family member or friend — preferably someone who makes around the same amount of money as you do. Once you have a list of recommended advisors, meet with them. Ask questions about their backgrounds, how they work and how they’ll communicate with you. Think of this as a job interview of sorts. Ask for references from current clients. If an advisor is good, they'll want you to speak with some happy clients. 

There are a lot of ways to make money. There are also a lot of ways to make your money work for you. If you're intrigued by what you’ve read in this article, you can start to make your money work harder. Choose one or two of these methods and apply them. As your wealth grows, you may want to try some additional strategies or add your own ways to make your money work for you. The most fun part of this exercise may be to think about what you can do with your additional income. Will you spend it on a lavish vacation? Buy a home or a vacation place? Donate money to charity or start a scholarship? The sky is the limit on what you can do with your additional money! Whatever you do, just try not to spend it all in one place.

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