Make your money work for you
One of the oldest and simplest financial strategies is to let your money work for you. If you’ve never heard it before, then you may not really follow. Let me try to put it another way. Would you rather put in a hard day of 10 hours work to get paid, or would you rather go fishing ( for enjoyment ) and still get paid? Unless you really enjoy your job ( or hate fishing ), then you probably picked the day on a boat. Who wouldn’t? That’s really the whole point of making your money work for you. If your money is busy making you money, then you don’t need to make money. So instead of going to work, you can go fishing. One has to wonder - how do you get to that point?
Invest as much as you can
If you leave your money under the mattress, it doesn’t work for you. If you’ve got it sitting in a savings account, it’s working, but not very hard. To really put your money to work, you’ll need to invest in the stock market. Whether you choose to go with mutual funds, ETF’s, or individual stocks is up to you. But the bottom line is that savings accounts, money market accounts, and bonds won’t give you the returns you want. If you really want to put your money to work, stocks are the only smart choice. Invest every penny that you can afford to - that means cut back on your expenses and work hard now to make as much as you can. The more you invest intelligently, the more rewards you’ll reap later.
Don’t forget about inflation
While you’re busy investing your heart out, don’t forget about inflation. This ties into the above - look past bonds and low-return investments. You need big returns so your standard of living doesn’t fall. Inflation averages 3-4% per year here in the US, and that adds up drastically over time. Keeping this in mind will keep you from falling back on “safe” bonds. Safe isn’t safe if it barely keeps pace with inflation.
Switch places with your money
Once you have enough money ( a subjective amount based on the person ) stashed away, you can switch places with it. What in the world does that mean? Rather than working and earning money yourself, your money is busy working and earning money for you. You live off the earnings, and let your money do all the work. Most people aren’t able to do this until retirement age - 60 or 65 or so. If you play your cards right, and make sure your money is always working it’s hardest, you can retire much sooner.
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February 7th, 2008 at 12:14 am
Money will only work for you if it is placed in the right situation, of course. Investments, annuities, and other well-thought-out plans can lead to plenty of days fishing (or whatever else you like to do) while your money takes its turn at creating more of itself. Thanks for the reminder!
Jerry
http://www.leads4insurance.com
February 7th, 2008 at 10:34 am
I think this is GREAT advice, though I’m not sure I would put my money into the stock market right now.
I of course recommend people invest their money into……..Dot Com Domains! Whether you are buying established ones to re-sell or getting them from the registry, it is by far the safest investment out there. Do some research first before starting, but you really can’t lose money. Domains (dot com in particular) appreciate much faster than they cost to renew yearly and even bad ones can easily turn a profit.
Great post! I’m sure it will inspire some good conversation here in the comments!
February 11th, 2008 at 10:14 pm
I’ll be keeping my eye out on any more domaining posts over at your site Kyle. I like the idea, just don’t have enough info to be comfortable yet. But given the knowledge, it’s an additional area to diversify in. Think - if the stock market’s down, it’s not likely that .com domains will lose value too.