When you’re sitting on your savings, your wealth is growing only as fast as you can save. Worse yet, every dollar and cent of your savings is losing value thanks to inflation. You need a better solution: You need to earn interest. You need to use your money to make money. Here are four ways to do that.
Buy a house
If you’re paying rent, you have an expense that is not helping you much in any meaningful sense. Sure, you need a roof over your head, but it would be much better to own that roof (and, you know, the whole house under it). If you buy your home, you’ll still pay something every month, but you’ll also be the owner of a very valuable asset.
And that asset could actually grow in value. Over time, homes of distinction can be worth more and more. If and when you sell your home, you may find that the money you spent on it has created more money for you.
Buy stocks
Budgeting and saving are important, but they won’t help you generate much real wealth on their own. To really get rich, you need interest. And to get maximum interest, you need to do more than just stash your money in a savings account. You need to invest.
Stocks are the obvious choice. Stocks are shares in companies, and they can increase in value over time and be sold and traded. As a beginning investor, you may want to be a bit careful: Aim for a diverse portfolio (a simple path to diversity is to invest in funds, such as exchange-traded funds and mutual funds that hold lots of stocks within them) and minimize risk.
Once you’re comfortable with your nest egg, you may want to take some spare cash and make bigger and riskier moves. That could mean targeting riskier stocks, or it could mean opting for other forms of investment entirely.
Invest in bonds, commodities, or currency
When it comes to investments, stocks are the obvious example. But, of course, there are far more things that you could be investing in. Take real estate, for instance, or bonds. And then there’s currency, which you can bet on simply by converting your money to the currency that you think will increase in value (relative, of course, to the U.S. dollar and other currencies). Like stocks, these investments can be as risky or safe as your strategy. The complexity of some of these markets does, however, tend to attract more daring investors.
Currency is a particularly exciting place to invest right now because of cryptocurrencies, which are digital currencies made possible by blockchain technology. Be careful, though, because cryptocurrencies have been quite the wild ride of late. The potential for huge gains is there, but so is the potential for damaging drops in value.
The best cryptocurrency to invest in is the one that you can afford. Cryptocurrencies should be a growth area for you, not a retirement plan. But if you use them right, and bet on the right cryptocurrencies in the long term, you could get a very nice boost to your wealth sometime down the line.
Invest in your education or business
There are a few powerful ways to turn your money into more money in very direct and immediate ways. But there are always ways of reinvesting your money in the person who got you this far — yourself.
You work hard to earn your money, but maximizing your effort isn’t the only way to maximize your earning power. You can and should also improve your earning power by growing your resume or your business. Consider using the money you’ve earned to invest in a course that will award you with new certifications and resume items, or take the money you’ve made and use it to expand the business you run. Eventually, more money could come back to you in the form of increased earnings.
