Make youtr money work for you

One of the biggest differences between the wealthy and the less wealthy is that wealthy people earn interest and everyone else pays. It is important to realize that money is a tool that can help you to achieve your goals. For you to reach true financial independenceyou need to have your money begin to work for you—not you for it. Here are three things you can do to start making your money work for you. These three steps can also help you break free of the bad financial habits passed down through your family. When you are budgeting, you are making your money do what you want it to.

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There’s no simple answer — or a single way to do it. 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.

Employing just a few of these strategies could net you hundreds, if not thousands, of dollars.

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.

2. Develop streams of passive income

Check it out. Make your money work for you. Use these 6 tips to put your money to work and build the foundation for your Rich Life. You’ll even make money while you sleep. Ramit Sethi. There are a lot of ways you can make your money work for you. With the right systems, you can save and invest for your future.

Invest in a Rich Life

Let your money work for you. All of us have heard that saying at some point, but what does it really mean? For some of us, the idea of compound interest makes natural sense. Yet this picture is still one that many people have a hard time thinking about. Your growth is actually accelerating. Your rate of growth continues to accelerate. In other words, it will have basically doubled at that point.

1. Open a high-yield savings account

Your budget gives you control over your finances and allows you to make financial decisions at the beginning of each month. A simple way to invest in stocks is through one or foor low-fee, broad-market index funds. Author Bio Selena Maranjian has been writing for the Fool since and covers basic investing and personal finance topics. Think beyond savings for retirement and find a good financial planner to help you save and invest your money. What is a good credit score? Credit Karma vs TurboTax. We’ve covered the dark side of credit cards — pernicious debt with steep interest rates. These goals may also drive what types of investments you choose to use. Best cash back credit cards. Bonds are another way to get your dollars to work for you earning. These accounts are usually available at online banks, which keep costs down by forgoing brick monwy mortar locations. Siegel has calculated the average returns for stocks and bonds wotk treasury bills between and How to retire early.

2. Develop A Budget

You may wish you lived in a huge, luxurious house and had staff waiting on you, to serve your needs, but that’s most likely not going to happen, right? What you might not realize, though, is that you could have an army of little workers toiling away for you and making you richer: I’m talking about dollars.

While you sleep and even when you’re on vacation, well-deployed dollars can be busy generating more dollars and beefing up your net worth.

Here’s a look at 10 ways to invest. See which ones you want to act on. Ylu first way to make your money work for you is arguably the easiest — though much of the time it won’t be the most powerful: bank savings accounts.

While checking accounts these days won’t pay you much, if any, interest, savings accounts do pay interest, and when interest rates are steep, they can pay you a lot. In the s, for example, interest rates were well into the teens.

To get better rates of return than you from bank savings accounts, you can park your greenbacks in certificates of deposit CDs or money market accounts, which tend to offer somewhat better rates. The catch is simply that you’re supposed to leave your CD money invested for the full term, or pay an early withdrawal penalty. Here are some recent representative CD rates:. Bonds are another way to get your dollars to work for you earning. There’s a wide variety of bonds, with different interest rates and risks.

Long-term government bonds often offer better rates than bank accounts, and are backed by the U. Bonds sold by the U. State and local governments issue municipal bonds, while businesses issue corporate bonds.

Municipal bond interest is often free makr federal taxes. Junk bonds feature generous interest rates because they have to in toutr 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 fof 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, mony 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 wor 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. Yes, plenty of people do well with it, but overall it’s not as powerful a wealth builder as stocks. Home values have risen sincebut from tothe 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 hou 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 landlordtoo, as that can also offer meager returns and a youtd of headaches. Many people think of gold as a great investments, yyou some people have made good money with gold, but over the long run, it’s not a great wealth-building strategy. Gold is volatile. Check out some sample prices per ounce:. Paying off your various debts wok 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 tor cards. Another way to make your money work for you is to establish some passive or relatively passive income streams for.

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. 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 worj 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. There are lots of ways that you can have your money working to build your wealth.

Consider the 10 ways we’ve discussed here and see how many of them you might employ and how much you might amass. Hundreds or thousands of dollars may be headed your way thanks to these strategies. Nov 25, at AM. Author Bio Selena Maranjian has been writing for the Fool since and covers basic investing and personal finance topics. For more financial and non-financial fare as well as silly thingsfollow her on Twitter Follow SelenaMaranjian.

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7 Ways to Make Money Work for You

2. Develop streams of passive income

You may wish you lived in a huge, luxurious house and had staff waiting on you, to serve your needs, but that’s most likely not going to happen, right? What you might not realize, make youtr money work for you, is that you could have an army of little workers toiling away for you and making you richer: I’m talking about dollars. While you sleep and even when gou on vacation, well-deployed dollars can be busy generating more dollars and beefing up your net worth. Here’s a look at 10 ways to invest. See which ones you want to act on.

Employing just a few of these strategies could net you hundreds, if not thousands, of dollars.

This first way to make your money work for you is arguably the easiest — though much of the time it won’t be the most powerful: bank savings accounts. While checking accounts these days won’t pay you much, if any, interest, savings accounts do pay interest, and when interest rates are steep, they can pay you a lot. In the s, for example, interest yu were well into the teens. Mkney get better rates of return than you from bank savings accounts, you can miney your greenbacks in certificates of deposit CDs or money market accounts, which tend to offer somewhat better rates. The catch is simply that you’re youhr to leave your CD money invested for the full term, or pay an early withdrawal penalty. Here are some recent representative CD rates:. Bonds are another way to get your dollars to work for you earning .