Many of us tend to worry about the present. We think about all the plans we have for the coming week, all the work we need to get done today, and how we are going to make time for important tasks like grocery shopping. Often, the result is that we do not think about our long-term future, especially financially. Maybe you have a 401k through your job, so you think you will be all set once retirement comes around.
Trying to grow your savings is never a bad idea. Whether you are planning for retirement, saving up for a big vacation, or just increasing the size of your safety net, it is wise to come up with a strategy that secures your financial outlook.
If you have saved up a good chunk of cash, then you may be able to invest it so that you can earn even more going forward. Here are five opportunities you should consider if you have some extra capital and want to invest it in future income.
The rental market has been growing for a long time. The last few generations are hesitant to get locked down with a mortgage, so they will often look for places to rent instead. Rental properties can also be used as vacation accommodations if it is in a location with lots of tourists. Either way, investing in a rental property could create strong passive income. With your cash reserves, you could afford a down payment with a debt-service coverage ratio loan that will fund the purchase. Then, you can use your research and skills to land a great real estate deal on a property. Once the property is ready for tenants, you can hire a property management firm to handle the logistics while you enjoy passive income from rental payments.
One of the most popular and low-risk investment options on the market is getting involved in mutual funds. Mutual funds are a large pool of resources from many investors that are used to build a diverse portfolio. The more diverse the investments are, the lower the risk to the investors. Generally, mutual fund investors let brokers take care of their money as they wait for long-term returns. Mutual funds are not a get-rich-quick scheme because they take time to build a lot of wealth, so this is a good strategy for growing your retirement savings. Plus, you don’t have to worry about doing the trade research yourself.
Buy a Business
A fully operational business may be able to make you money if you have enough cash to secure a business loan for purchasing a company. For example, if you notice a popular restaurant for sale in Calgary, Alberta and you have a background in the service industry or business, you could buy that restaurant and enjoy the profits. Sometimes, previous owners are planning to retire, so they will sell their business to someone who can take it forward. Other times, a company has been mismanaged and the owner puts it up for sale in hopes of making some money and turning it over to someone who can turn things around.
Get Into Day Trading
If you love the excitement of a fluctuating stock market, then day trading may be a fun and lucrative hobby to get into. First, you should know that it is not easy. Predicting the rises and falls of a particular stock can be incredibly challenging. You have to understand how markets work, analyze patterns from the past, and bet on predicted outcomes. Also, the market can shift fast, and not paying attention for just a few hours could significantly affect the value of a trade. Even so, if you have some money to invest, day trading on platforms you can access from your phone could be a good way to make some extra money, as long as you know what you are doing.
Certificate of Deposit
When you have money saved up, it often sits in a savings account. Most savings accounts have very low interest rates, so your thousands and thousands of dollars may only yield a few bucks every year. A better place to put some of that money would be a certificate of deposit (CD). CDs are like temporary savings accounts with much higher interest rates. You can put your money into them for six months, a year, or five years, depending on the firm you use. As long as you do not withdraw any money from the CD over the time period, you will earn guaranteed returns at the agreed-upon rate. It’ll earn you much more money than a generic savings account would at the end of the term.
When Money Makes Money
The main source of money for most people is a job. However, investments can be just as beneficial if not even more so. Or, you could just turn some of your savings into supplemental income. It all depends on the investment opportunity that you choose. Buying a business or real estate property can yield you some profits for a long time. Investing in a CD or day trading will let you earn profits over a shorter period. Each strategy uses the money you have to make more money, preparing you for a brighter financial future.