In order to become better at our finances, we need to learn how money works. One of the most important skills to obtain financial independence is learning how to put your money to work for you. You might think that saving money is sufficient but in the long run, money continues to lose value due to inflation. As such, if you money is just sitting around and not doing anything, it will become worthless overtime. In this post, we will explore some of the ways you can put your money to work and generate more gains for you.
Smart Investments
Investing your money is the best way to make it grow. Though the thought of investment may be scary for beginners, there are many low-risk options out there to get your feet wet. Investing your money over a period of time can eventually grow into a substantial portfolio. This in turn earn you even more.
One of the best investment strategies is to invest in Index Funds. These funds consist of a variety of stocks and/or bonds which are carefully chosen to mimic the composition of a financial market. Think of it as buying a small replica of the market. You automatically diversify your investment by putting your money in index funds – which is one of the best strategies to adapt as an investor. By diversifying your investment, you are making sure that you aren’t putting all your eggs in one basket.
Assets over Liabilities
When it comes to putting your money at work, always choose investing in assets over liabilities. Investing your money in profitable real estate and carefully curated art that will appreciate overtime is money well spent. Liabilities on the other hand cost your money to acquire and lose their value over time. An example of a liability would be splurging money on a fancy car. Something that will depreciate the minute it leaves the showroom and continues to lose money with each passing day and mile. Granted you might enjoy it and get some value out of it as a means of transportation. But overtime, you will be spending money in repair and potentially selling it down the road for pennies on the dollar.
Instead of spending thousands of dollars on a car, save the money for a down payment towards a condo or an apartment unit. Given you do your due diligence in acquiring an investment property, you can reap the benefits of rental income for years to come.
Start a Business
We aren’t recommending starting something big. Rather, think of ways to invest a small amount of money to either build a business yourself or buy one to run. These days, online digital businesses require very little investment. Think of a blog or a website that you can monetize. A domain name and hosting is relatively cheap these days. You can either learn to build a website/blog yourself using YouTube tutorials for free or you can leverage the services of someone off Fiverr.
You can also use services like Fippa to search and hunt down businesses that are already up and running. Flippa is a marketplace for various online assets such as blogs, dropshipping stores, mobile apps and other SaaS applications that others have built and are now selling. Depending on what kind of business model interests you and your budget, you can acquire a pre-running business and take over its operation. Once again, it is vital to do your due diligence when purchasing these businesses. Ask as many questions as possible to learn about the business expenses and revenue as well as what it takes to actually run it.
If It’s Too Good to Be True…
It probably isn’t. The business world is rife with scams and frauds. This is especially true of the online world where a lot of assets aren’t tangible. These days you cannot watch a video on YouTube or scroll down through your Instagram or Facebook feed, without running into an ad that promises you some kind of business or investment solution with huge returns.
If someone promises hundreds of thousands of dollars in exchange for a small fee, it is likely a scam or some sort of a pyramid scheme. Make sure to research any company, product or individual claiming huge returns before investing your hard earned money into them.
Rinse and Repeat
Once you have managed to build a profitable asset, be it a rental property, an investment portfolio or an online asset. Get ready to rinse and repeat the process. Putting your money to work by creating revenue generating streams is not only financially rewarding but it’s also a learning journey. There are continuous lessons to improve and discover new ways to make your money go even further for you. Continue what works and drop that doesn’t but repeat the process to build on top of what you have established.
Conclusion
When you hear someone say the phrase: the rich get richer – it often has a negative connotation associated with it. However, there is a lot of truth to it. This isn’t because rich folks are evil but rather, they have learned the art to put their money to work. They do have an advantage however by having more money at their disposal to put to work for them. However, with some hard work and smart habits and savvy investments, you too can start using your money to create more of it.
Disclaimer: Like all other posts on Hustle Domain, please keep in mind that this post is for educational and entertainment purposes only and is not meant to be financial advice. Please practice caution and do your own research before investing.