The question still remains, what should I do with your money?
The answer is basically the difference between those who have amassed wealth and the paupers.
It is pertinent to think of money this way because it provides insight into actions that can improve your financial health.
As a result, this article will be di-faced, implying that investment opportunities for your money will be discussed as well as options for what to do with money.
This promises to be an educative piece. Brace up, it may be lengthier than usual.
Table of contents
What Should I Do With Money?
Here are the best options on how to spend your name.
Let’s dive into each of these areas and see what actions you can take to implement them in your daily life.
- Spend
- Save
- Invest
- Give Away
- Taxes
#1. SPEND
For most folks, whenever the talk of what to do with money arises, the first thought tends to spend.
This is quite understandable because we live in a consumer-driven society. While you are spending your money, you are also losing much more in hidden costs like sales tax and even the missed investment opportunity.
Well, someone has to fuel the economy, so, why not you!
Read: How to Stop Spending Money: 10 Habits you should stop Now
#2. SAVE
Saving money is definitely better than spending it.
Saving is the first step in wealth building. However, the problem remains that you cannot become rich by saving. You need to leverage the power of your saved funds to invest.
To actively save, put your money into a checking account, savings account, or another low-risk account. Your money will be safe, although it is just sitting idle, not working for you.
Read: 10 Simple Ways To Save Money On A Tight Budget This Year
#3. INVEST
This is where wealth-building begins.
Investing works by compound interest, where your growing money keeps earning interest and growing.
Investments have many options. You can start from the easy ones like stocks, bonds, ETFs, Index Funds, etc. Others that I really like are investing in real estate and starting your own business.
#4. GIVE AWAY
You don’t have to be a billionaire to donate to charity. Charity is a great way to give back to those who are less fortunate. This is a great way to spend your money, it is for a good cause.
Here is a secret, charitable donations are tax-free. So it can actually benefit you to do good!
Find a charity and make it a point to donate each year. It doesn’t have to be a lot, but it’s good to get in the habit.
#5. PAY TAXES
This is one concept that you actually have a choice in.
You do not have a choice not to pay tax, but you can minimize the amount you pay by leveraging on the tax rules and exemptions.
Remember, evading tax will make you pay more than is necessary.
You can either familiarize yourself with some tax strategies or hire a qualified tax professional for help in minimizing your tax burden.
Read: 10 Ways On How To Pay Fewer Taxes | Insider Secret
New Investment Opportunities in 2023
The best strategy to invest in building a diverse portfolio of low-risk investments. Choose the proper assets and have a plan.
These are 10 investment options you can take advantage of.
1. Mutual funds
It is best to start investing in mutual funds rather than individual stocks or bonds. Firstly because you lack experience; second, it enables investment in a broad portfolio of stocks and bonds in one transaction rather than trading them all yourself.
What exactly is a mutual fund?
A mutual fund is a type of professionally managed investment that pools your money with other investors. The fund’s managers then use the pooled money to buy securities for the group.
They are safe investment options as well as inexpensive. You’ll either pay just one trading commission or nothing at all as opposed to paying trading commissions to buy a dozen or more different stocks.
This is the first option that answers what you should do with money.
#2. Bonds
Bonds come in the form of corporate, municipal, and treasury bonds.
They are debt securities that raise capital for others. They finance new companies, local projects, and even the government. While no investment is risk-free, government bonds (T-Bonds) are about as close as possible.
Worthy bonds are another worthy investment. They cost $10 each and offer a fixed rate of return of 5%. Each bond has a 36-month term and interest is paid weekly. Cash the bond anytime you like even before maturity and you’ll never pay a penalty.
The money you invest in Worthy Bonds is used to fund American businesses, and Worthy handpicks those businesses they lend to. They only invest in companies whose liquid assets far exceed the amount of the loan, making the risk low for a terrific 5% return.
This is the second investment you should do with money.
#3. Robo-advisors
What else can you do with the money? Invest in the Robo-advisor route. Financial advisors use this algorithm to provide you with the very best advice about financial investments.
Robo-advisors make investing accessible for everyone. These apps are more convenient and affordable than a physical standard financial advisor.
There are some great Robo-advisors out there and we’ve put together a list of our favorites and who they’re perfect for.
| How much do I have to invest? | Where should I invest? |
|---|---|
| Beginner: Less than $500 to invest | Betterment |
| Intermediate: More than $500 to invest | Wealthfront |
| Advanced: More than $1,000 to invest | M1 |
Betterment
You don’t need an initial investment to open an account. The annual fee is 0.25% each year.
With betterment, you can invest in stocks and ETFs across thousands of companies. It gives a customized portfolio based on your preferences and risk tolerance.
Wealthfront
Wealthfront requires a $500 initial investment to open an account. And until your investment reaches a grand total of $10,000, there are no fees that you’ll have to pay at all.
Again, wealth front’s fee is quite competitive at 0.25% a year.
M1 Finance
To invest, you need $100, the platform is user-friendly, which is a kind of combination of robo-advisor and a traditional brokerage.
M1 Finance makes it easy for new investors to get started because they are willing to help you buy, and there are no fees at all for either opening an account or trading.
Vanguard Digital Advisor
You need $3,000 to invest and have your portfolio managed by one of the top names. The target advisory fee is about 0.15% of your balance from $5,000 invested, which is about $7.50 a year.
#4. Stocks
If you don’t put more than 10% of your portfolio in individual stocks until you get very comfortable with what you’re doing.
The stock market is a good place to start growing your money. There are both short and long term bonds.
Short-term bond funds are usually only managed by a professional financial advisor. They are unstable as the money market but offer high earning potential. The monthly payoff is according to the market condition per time.
Some good platforms to learn about stocks are:
- TD Ameritrade
- ETRADE
- M1 Finance
- Ally Invest
Read: How To Invest in Nike Stock With Little Money | Full Guide
#5. Real estate
Real estate is one investment path that has high earning potential, you can even make millions.
It is a long-term investment for cash flow made from rental properties every month. This increases over time while mortgage payment remains the same.
Like any investment, consider the risks before venturing into becoming a landlord.
Check out Roofstock or Fundraise for real estate market prospects.
Here are the Best Cities To Invest In Real Estate | Expert View
#6. Retirement accounts
This is another thing to do with money. Retirement plans are not necessarily an investment but it offers a platform to invest in.
The contributions are tax-deductible and the investment income tax-deferred. It generally has tax advantages. Among the other listed investment plans above, it has the best tax advantage.
The only downfall is that there is a limit to when you can withdraw the funds.
#7. Certificates of Deposit (CDs)
A CD enables one to deposit an amount of money for a specified time in exchange for a guaranteed return no matter what happens to the interest rates during that period.
Be sure and buy your CD with an FDIC-insured financial institution because up to $250k is insured. The longer the term of investment, which ranges from 3 months to 5 years, the higher the yield.
Interestingly, CIT Bank offers one of the best CD products. Even with a competitive rate, there is no penalty for withdrawing early on their 11-month CD, and yet the rates are still competitive.
#8. Invest in Yourself
This is one of my favorite investments, even though most people don’t think of it that way.
It is the best long-term move you can take. Over time, you increase earning potential which will positively impact other investing activities.
This can be in form of skill acquisition or transition from one job to another. It isn’t limited to jobs, it can mean improving your health, learning about investments, etc.
We can guarantee this to improve the quality of your life.
#9. Invest in a Side Business
According to the IRS, there are at least 41 million self-employed people in the US, most of whom run their businesses as side hustles. You see, you are not alone!
Making additional money through a side business can help ease that financial strain on you. In the long run, investing your time and efforts on a side business is investing in yourself.
It’s not as complicated as you may think, either. Most side businesses start with either a hobby or by converting what you do on your primary job to a second income source.
We have an article on side hustles you can join to make money.
Also read: 19 High Paying Side Hustles For Fathers With Less Stress
#10. Pay down or Pay Off Debt
Truth is, life is unpredictable. As a result, leaving some amount of money won’t hurt.
Paying down or paying off debt will be one of the very best investments you can make. A credit card with some 20% interest rates can save you if there is any jeopardy in income.
In addition, paying off a credit card with a 20% interest rate will be like locking in a 20% investment return for several years. This isn’t only about planning for the worst but preparing for the best.
It is much like building cash reserves, and it is your advantage whether you’re preparing for an incoming storm or jumping into a new venture that will improve your future.
This will be helpful: Is it Better to Save or Pay Off Debt?
Conclusion
It is important to pay attention to what you do with the money in 2023. It is about time to commit to your financial well-being.
From all the investment options in this article, we advise increasing your retirement savings or launching a side business. In addition, the less money you owe the easier each of those ventures will be.
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