You would be surprised how much your interest rate really matters. For instance, the same amount of money put into a savings account with a 4.7% interest growth can make you thousands of dollars more in ten years than the same amount in an account that earns .45% interest. With that in mind, let us take a look at how you can make your money work for you, instead of you always working for it.
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Shop around before settling on a savings account.
It is important before you open a bank account to shop around for the best interest savings. The first results you might find from a web search engine may not always be the best options. Frequently you can find better local deals with small local banks or with credit unions. Mainly it is important to keep these numbers in mind before opening an account.
Make Stock Investments
Putting money into stocks can of course be much riskier than into an insured savings account, but you should also take into account that the rewards you can reap can be much higher. Stocks can go up in value, or they can drastically decrease. Standard advice is not to invest money you need in the next five years. And be sure to do your research before you invest!
Mutual Funds
In a mutual fund your money will be joined with the money of other investors and invested in possibly a variety of stocks or bonds. This way instead of making one single investment, you have better odds of success because your money is in different areas and more diversified.
Bonds
Buying a bond is like loaning out money to companies or a government agency. It is like letting them use your money and in the mean time getting an IOU with interest. This is generally a lower risk than a stock would be, but because of that they have lower interest rates than stocks, although it is still higher than most banks.
Peers Lending to Peers
In this sort of arrangement you act as the bank. There are peer-to-peer lending sites on which people can post loan requests. You fund their loan and will earn an interest rate until it is paid back. On the other hand nothing is insured, so whoever borrowed your money can default on your loan. It is important to research the risks of peer to peer lending before you get involved. But once you have decided to lend, if you meet the requirements, there are a variety of sites out there on which to begin.
The Real Estate Market
An investment for the long term which may be becoming less common is investing in real estate. This requires a great degree of patience, research, money, and time. The rewards for this sort of investment can be quite significant, but it isn’t really just easy money. What you get out of this investment depends on the work you are willing to put into it. Just remember, tenants and repairs and demands can be a hassle – be sure you are prepared for it.
Microloans
Microloans are exactly what they sound like – very small loans. This is similar in concept to peer-to-peer loans which we discussed a couple of items back. These small loans can fund projects across the globe. With smaller loans it is also more likely to be certain of getting your money repaid than with larger loans, though even if you have similar interest levels, your pay off will be smaller.
Collection
Most things which people collect are for the enjoyment of owning whatever that thing is. While most people collect with the intention of keeping their collection, a very neatly maintained and orderly collection can be sold for a great deal of money, depending on the item collected and the market for it. Perhaps you already have a partial collection of something and are able to complete the collection. Full collections sell better than partial ones would, and usually the older the collection is, the more valuable it tends to be.
With a great imagination, there is no end to the possibilities of how you can make your money work for you. The first step before carrying out any of these plans is to look at the finances you have and see how much you will be able to invest, as well as considering how much it would set you back to lose that money if something should go wrong.
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Before investing money, especially a great deal of money, it may be advisable to consult an accountant or other financial advisor. Just having another set of eyes who can look over your accounts and make a prudential judgment about how much you can invest can only help you out!
For some more information on investing your money, check out this video: