Food, lodging, transportation, and other customary expenses are necessary to live a comfortable life. You can also attack the problem from another direction by looking for ways to multiply your money instead. Here are some to consider. One of the ways you can multiply your money is to open an interest-bearing checking account. This is because many banks require a high balance in order to open an interest-bearing checking account.
This account offers and earn 0. Another way to multiply your money is to set up an emergency fund. Setting aside money for financial emergencies may eliminate the need to use your credit card as a costly substitute.
Using your credit card causes you to pay more money due to high interest rates. It can also compound any financial woes you may have by giving you one more bill to pay each month. But saving a little money each month and establishing an emergency fund can change that. It can help you to eliminate interest payments completely because the money is there when you need it. Then all you have to do is replace the money used from the emergency fund.
You can do it slowly over time with no penalties or interest to worry about. Furthering your education may also be a way to multiply your money. Hit a big bank and you get more money, but more heat from the police. This is just my guess. I have no actual proof of this. You just have to understand how it works, have an investment strategy, and how to invest over the long term. All you have to do is set up a monthly transfer and they will pick your investments and do all the work.
If you would rather invest in the stock market on your own, find some low cost mutual funds, ideally index funds to invest in.
If you want to multiply your money faster through investing, you can look into individual stocks. There is a good chance if you pick the wrong investments, you will lose money and not make money. One hidden benefit is the absence of reinvestment risk.
With standard coupon bonds, there are the challenges and risks of reinvesting the interest payments as they're received. With zero-coupon bonds, there's only one payoff, and it comes when the bond matures. While slow and steady might work for some investors, others find themselves falling asleep at the wheel.
For these folks, the fastest way to super-size the nest egg may be the use of options, margin trading , or penny stocks. All can super-shrink a nest egg just as quickly. Stock options, such as simple puts and calls , can be used to speculate on any company's stock. For many investors, especially those who have their finger on the pulse of a specific industry, options can turbo-charge a portfolio's performance. Each stock option potentially represents shares of stock. That means a company's price might need to increase only a small percentage for an investor to hit one out of the park.
Just be careful, and be sure to do your homework before trying it. For those who don't want to learn the ins and outs of options but do want to leverage their faith or doubts about a particular stock, there's the option of buying on margin or selling a stock short.
Both of these methods allow investors to essentially borrow money from a brokerage house to buy or sell more shares than they actually have, which in turn raises their potential profits substantially. This method is not for the faint-hearted.
A margin call can back you into a corner, and short-selling can generate infinite losses. Lastly, extreme bargain hunting can turn pennies into dollars. You can roll the dice on one of the numerous former blue chip companies that have sunk to less than a dollar. Or, you can sink some money into a company that looks like the next big thing. Penny stocks can double your money in a single trading day.
Just keep in mind that the low prices of these stocks reflect the sentiment of most investors. While it's not nearly as fun as watching your favorite stock on the evening news, the undisputed heavyweight champ is an employer's matching contribution in a k or another employer-sponsored retirement plan. Making it even better is the fact that the money going into your plan comes right off the top of what your employer reports to the IRS. You won't get a company match, but the tax benefit alone is substantial.
A traditional IRA has the same immediate tax benefit as a k. A Roth IRA is taxed in the year the money is invested, but when it's withdrawn at retirement no taxes are due on the principal or the profits.
Either is a good deal for the taxpayer. But if you're young, think about that Roth IRA. Zero taxes on your capital gains? They often consider cutting on costs and doing without some of the most basic wants like car insurance. Think about it. You can only budget to a certain extent and anything beyond the limits could be detrimental. On the contrary.
It only means that you should look for other better ways to get more cash. Just look around you. When it comes to multiplying money, the options are endless. All you need is commitment and patience. For some, it takes a short while to see the results. Often, the answer is no. Ask them how they did it. Let them teach you how to go about making more money. You could decide to start your own business if you can handle two work two jobs the better. That doubles your chances of achieving your goal faster.
Side hustles are one of the simplest ways of making some extra bucks. For example, if you love painting and have a part-time job, good for you! Use the rest of your day to engage in your passion and earn from it. How about the weekend? Those might be the days you get to relax. Instead of wasting time in front of the tube, use that time to capitalize on your side gig. Paying all your debts is a great way to multiply your money.
That way, you have some money to set aside and use as you please. Depending on your finances and the number of debts you have, you could choose to clear one debt at a time. A great way of increasing your determination is giving yourself a deadline.
With a steady source of income, debts can be a thing of the past for you. Unless you would like to get yourself into that pit again. Lastly, do the same for the remaining debts. The one after the smallest debt becomes your centre of focus next. This is because you had already started paying for it. Investing is something that most people avoid at all costs. This is likely to happen if you decide to invest in a business or person.
Anything could go wrong. As much as this is true, guess what?
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