Investing your extra income/income in yourself is one of the best ways increase your income
You could make thousands more each year if you have the ability to learn new skills through books, online courses, coaching, and so on. I have learned skills from a $10 book which have helped me make tens of thousands of dollar or more. The topics I studied were digital marketing, copywriting and custom term paper writing.
Even small investments like an online $100 course have paid enormous dividends in my career and life. These are my single most valuable investments as I have grown this blog and website, which is now my full-time venture.
If you are patient and willing to wait for it to grow, the stock market can be one of your best investments.
The S&P 500 index, which was created in 1926, has returned an average of 9% annually when you add dividends and adjust to inflation. That’s quite good! A 7% annual return would double your money in 10.2 year!
The most common mistake people make is to try and time the market or beat the market. Or second-guess what they plan after they have entered a position.
The average investor will prefer to “set it and forgo it”. This means that you can put your money in a 401k account or brokerage account and make smart investments. You can then check it every three to six month (not every day!).
Stock market can be a great place for extra income or retirement savings. However, many investors are their worst enemies. You should keep your emotions under control and only invest what you can afford to lose.
Although the stock market has an average positive return over time it doesn’t mean that you won’t experience down years.
Although no bank account offers particularly high interest rates in the US at the moment, there are some that are better than others.
An FDIC-insured bank account (Federal Deposit Insurance Corporation), is a great way to make interest. There is no risk for you and a little extra interest can help pay your living expenses or compound your savings.
Check out certificates of deposit (CDs), which you can also get from your bank. A CD is a promise to the bank to allow them to use your money within a certain time frame. In return, they will pay you more interest. If you are certain that you won’t be using the money for more than six, twelve, or longer, this is a great way of making extra cash.
A CD is a great option if you have savings and aren’t sure what to do with it.
If you are looking for a higher average return than the CD interest rate, then consider investing in the stock exchange (mentioned previously).
A good rule of thumb is to keep at least six months of your living expenses in a bank account, in case you lose your job.
As you earn more money, you can put some extra cash into an emergency fund account that you don’t touch.
After you have six to twelve months of expenses covered you can stop contributing. You don’t have to contribute a lot of money at once. It’s a great way to increase your financial security, and this fund is a good place for you to put some extra money.
You can buy a home to pay off your rent if you have lots of money but don’t know how to use it. While you will still need to make a mortgage payment, you will be building equity (ownership of the property).
Renting vs. owning is a complicated topic. You’ve probably heard it said, “Renting is throwing away money.” This is not always true.
As a rule of thumb, however, if you plan on living in the same area for more than five years, buying a home is often a better option. It’s a no-brainer if you plan to stay there for more than 10 years.
There are many ways to invest extra cash and make more money with your existing money. Every person is different, so the best strategy for you will vary. Consider the suggestions above and consider your goals and circumstances before you create the plan that works best for you.