When it comes to building your future wealth, it is essential to consider that just leaving money saved up in a bank is not a great way to create an investment portfolio and that you need to be willing to take on financial risk to yield greater returns. There are many ways to grow money, from more standard forms of investing, such as financial markets, to more unique investments like cryptocurrency. So here are six ways to increase your cash.
1) Stock Market
Equities are the most common ways people invest their money. Depending on which companies you invest in, you can yield capital gains based on the market value of shares or yield dividends as a perk of a corporation’s owner. While many people might choose to use a fund manager that pools investor money into mutual funds, individuals can invest on their own with guidance through resources such as SEC insider trading forms through any broker and buy individual equities as well as exchange-traded funds or index funds.
2) Company Retirement Accounts
Most money people invest in the market is under a qualified retirement account, enabling investors to receive tax breaks towards their future use of money. The most prevalent version today is a traditional 401K, which is an employer-sponsored account. Many employers provide a company match, meaning that for every dollar the employee puts into a retirement fund, the company will match it, meaning your investment into retirement yields a one hundred percent return automatically. For those who are in public sector jobs, employer-sponsored retirement accounts are referred to as a 403B or 457B.
3) Individual Retirement Accounts
Alternatively, a person can save up for retirement outside a company-sponsored retirement account through an individual retirement account (IRA). An individual can put money into two main types, Traditional and Roth. A traditional enables someone to put money in pre-tax, meaning the funds invested can reduce taxable income the year it’s funded; however, when it comes time to pull money out later, all the money in the account when withdrawn is taxable. Alternatively, investors can put their money in a Roth, which means that the money is taxable upon initial investment. However, the money put in and the contributions grow tax-free.
4) Real Estate
Real estate has created some of the world’s most prominent millionaires for those who are willing to be heavily involved in their investment. Landlords, who either buy cash or leverage rental properties with tenants covering the cost of stuff, are among the safest and yet most significant returns on investment for those who can be involved with the upkeep and know what to invest in. The key behind real estate is that in the right markets, housing is an appreciating asset, and so not only does a tenant cover costs and provide a profit, but over time the value of the property goes up.
The age of digital currency has become a huge trend, especially when government currencies face volatile circumstances due to global market forces. Whenever a recession occurs, people tend to invest their money away from standard currencies and invest either in gold or now cryptocurrencies. Although the value of these currencies is not backed by anything, it is the demand for investing in them that has generated meaningful returns. Although these are risky, they can make people money quickly if they invest at the right time.
6) Make More Money and Spend Less
Wealth is a simple equation, which is income plus investments minus lifestyle. So, while a big part of growing wealth is investing, part of supporting has enough capital at your disposal. For many, the solution is to make more money or find a way to spend less so that more capital can be put towards investing; find ways to grow your take-home pay and keep living expenses under control. Debt should not hamper your ability to invest in your future.