Growing your money is an essential skill in mastering money.
Grow Wealth by Making Money with Money
The easiest way to make money with money is by earning interest. You can earn interest by depositing cash into an interest-bearing account at a financial institution. Since the risk is relatively minimal, the return is almost negligible.
However, once you’ve established a safety net of savings accounts, you can consider transferring some of that money into higher-yielding accounts offered by banks, credit unions, and other financial services companies.
You want to start thinking about earning more money with the money you’ve saved while keeping the funds liquid. Giving you quick access to the money without the need to sell stock, property, or any other assets.
Deposit Savings into Higher-Yielding Accounts
Most financial institutions offer close to zero-percent in interest for basic savings accounts. The benefit is easy and quick access to the savings when needed. But that doesn’t mean you can’t make a bit more while the money sits in the savings account.
High Yield Savings Accounts
Let your savings grow by placing your emergency fund, travel fund, freedom fund, and more into an account that offers a better rate of return. Shop around for better rates and consider online-only savings accounts which often provide higher interest rates than your traditional banks.
Cash Management Accounts
Cash management accounts or CMAs are typically offered by nonbank financial providers as an alternative to traditional checking and savings accounts. It combines the services and features of those accounts under one product type. Most CMAs offer competitive interest rates.
Money Markets
Money Markets is a type of savings account that offers a higher rate of interest in exchange for larger than normal deposits.
Certificates
A certificate of deposit (CD) is a special type of savings account offered by banks or credit unions. A CD is also called a “time deposit.” CDs will often have higher interest rates than you’d find with traditional savings or money market accounts. However, you’re required to keep your funds in the CD for a specified period of time to avoid penalties. The end of that time period is called the “maturity date.” The size of the penalty you will pay if you remove money from a CD before the maturity date will vary.
Certificate Ladder Strategy
A CD ladder strategy isn’t complicated. It’s simply opening multiple CDs with different maturity dates. For example, you’ll open a 3 month, 6 months, and 1-year certificate at the same time with equal or varying deposit amounts.
The benefit of laddering your CDs is to give you a higher return and access to funds as the certificate matures. It ensures you’ll have access to some of your money as opposed to all of it locked for a longer time period.
Investing
The basics of investing are when you place money into assets with the expectation of receiving a profit when sold. You can invest in companies, shares, real estate, or businesses. In fact, when you store money into a savings account that offers an interest rate, you’re “investing.”
But, for now, we’ll focus your attention on the stock market which is more accessible to the average person. Investing in the stock market looks intimidating and overwhelming but it doesn’t have to be. If you pay little attention to the analysts and daily market activity, you’ll feel less stressed about investing.
As Warren Buffet once said most investors should focus on passive investing through index funds. Stop worrying about trying to beat the market or make daily trades. The stock market returns on average beats the returns you’ll get from simply saving money.
Some type of investing:
- 401(k)s
- Stock Options
- Employer Stock Purchase Programs
- Managed portfolios with Robo-advisors
- Stock trading with discount online brokerages
Search the financial marketplace to discover products and services to help you grow your money.
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