The world might seem volatile, but the stock market’s continuing to post record-breaking numbers. And that’s great news if your stimulus check is eating a hole in your pocket. As of late 2020, it’s estimated the global market will reach $95 trillion—and potentially climb even higher.
If that sounds exciting, hold onto your hat. It could potentially get better. However, you don’t have to dive headfirst into the sometimes volatile stock market to invest and grow your cash. In fact, you could try a number of surprisingly easy vehicles and strategies to nurture your money from tiny seed to full-fledged bloom.
1. Use cards that give you a little payback.
Every day, you use plastic like everyone else. Credit cards. Your debit card. Even those proprietary store cards. They’re all useful, but they could be more useful to you.
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In addition to paying down all your interest-bearing card debt as rapidly as possibly, look for debit cards that sweeten your relationship. Some carriers promise 1-5% cash back on purchases. Other companies round up each purchase and automatically send those extra pennies into your personal savings account.
Choose wisely and let your dollars multiply without having to change your shopping behaviors.
2. Lend your extra cash to dreamers like you.
You don’t need millions to invest in others. In fact, with just a few thousand dollars, you can join the growing ranks of peer-to-peer lenders.
What is peer-to-peer lending? It’s the process of allowing people just like you to temporarily loan their money legally to other consumers. Depending on the arrangements for each lending transaction, you could wind up earning interest rates much higher than you might get from a standard savings account.
The biggest caveat is that you can’t depend upon all your peer-to-peer lending interactions to pan out. You’re taking somewhat of a risk, so do your research first and start by lending to people with stronger credit profiles.
3. Stagger a few certificates of deposit.
You see them advertised at your bank all the time: CDs. They’re certificates of deposit, and they can help you invest safely.
CDs are simple to understand. You give the lender a specific amount, such as $500. The lender is allowed to use the money for a certain amount of time, such as three months. During the three-month period, you have no access to your money. But when the three months is up, you get your money and interest back.
You’ll find tons of CD offers and specials at local and national banks. To ensure you don’t lock up all your cash at once, diversify your CDs. That way, they’ll mature at different times.
4. Dive into the property pool.
Real estate continues to be a smart investment vehicle because there’s only so much to go around. With that being said, you can’t consider your primary home an investment tool because you’re living there. Instead, you’ll need to search for other properties.
How you get a return on your money will depend on the type of real estate you choose. For instance, some people like to buy fixer-uppers and flip them for a profit. Others enjoy renting properties and earning monthly income from residential or commercial tenants.
Do your homework before going full-force into real estate. You absolutely want to understand what you’re getting into.
5. Buy your way into the world of government bonds.
Have some money sitting around that you can afford to not touch for a year or perhaps a few decades? Government bonds could be the right decision as a long-term way to earn some interest on your dollars.
Government bonds are backed by federal or municipal entities. They’re considered secure and conservative. Additionally, you don’t have to wait until the bond matures to get something back for your willingness to let go of your dollars. Each month, you’ll receive a payment that’s equal to the interest.
One aspect to note about bonds: They’re not going to make you rich alone. Nevertheless, they’re a good way to get a little something, especially if your money is doing nothing but sitting.
Best Practices to Keep in Mind for All Your Investments
Excited to get started by moving your money around? Before starting out, take a step back and perform a bit of due diligence.
First, get a realistic view at the amount you can afford to invest. Sure, you might have $3,000 divided between your high-yield savings account and standard checking account. Yet you don’t want to use the entire $3,000 at once. Rather, you need to figure out how much of the $3,000 you can reasonably “lock up” in investments.
Secondly, always take a look at your current debts, not including your house mortgage. Do you have a high credit card balance at an astronomical interest rate? Instead of investing your disposal income, put it toward wiping out high interest debt. Otherwise, you might end up investing your money and not really getting anything out of it.
Third, try a few different investment vehicles, if you can. Most money managers have a common mantra: “Diversify, diversify, diversify.” Without a doubt, diversification will help you avoid losing money in the long term of an investment that turns sour.
As a final suggestion, you should always construct some kind of a paperwork or computer spreadsheet to track your investments. Your spreadsheet should show you at a glance where your money is and what you expect to earn. Though this type of documentation takes time upfront, it’s invaluable down the line.
Ready to get started? All you need is a little extra cash and at least a low to modest risk tolerance. In time, you’ll like knowing that your money’s working hard—even while you’re dreaming of what to do with all your cash.