We’ve all know the common saying, “make your money work for you”… but what isn’t so common is knowing exactly how to implement this financial suggestion… Below are 3 tips from Sean Gould, a wealth strategist with Waddell and Associates and a certified financial planner to give you a taste of how you can get the most out of your money:
Open a high-yield savings account.
Gould explains that before sending your money off to do the heavy lifting, you’ll want to have an emergency savings account of about six months of living expenses stored in cash.
A smart place to keep it is in an FDIC-insured high-yield checking or savings account, where it can generate more value as it waits.
A typical savings account offers an interest rate around 0.01%, and a typical checking account is the digital equivalent of putting your money under the mattress. However, high-yield checking and saving offer interest rates that exceed 1% — 100 times what you’d get otherwise.
These accounts are usually available at online banks, which keep costs down by forgoing brick and mortar locations. NerdWallet provides comprehensive lists of high-yield checking and high-yield savings.
Choose credit cards with rewards you’ll actually use.
Using a credit card might not feel like putting your money to work, but choosing a card with rewards appropriate for your lifestyle (read: airline miles cards aren’t great for people uninterested in travel) means each dollar you spend on your cards is doing double duty.
“As a financial planner, we don’t like debt, but if you have the cash flow and predictability in your budget and you can pay off your bill every month, there are great credit cards out there,” says Gould. (See some of the best credit cards for every lifestyle.)
If you have credit card debt, this strategy isn’t for you — the key to making your money work with your cards is being able to pay off your bill in full every month.
Invest in real estate.
If recent history has taught us anything, it’s that housing isn’t a guaranteed investment. That said, if you have the available cash and risk tolerance, however, investing in residential or commercial real estate may be a possibility.
Investing in real estate is two-pronged: You could consider buying a single home to live in to be an investment, or you could invest beyond your home, into land to sell or stores or homes to rent. Branching out beyond your own home “depends on your market and the appetite for rental real estate,” Gould says. “In most markets, if you can handle the headaches and there’s room, it’s an option.”
But in the spirit of diversifying your assets, Gould says to bear in mind that many homeowners already find real estate to be the largest asset in their portfolio, and cautions would-be real estate investors to be wary of weighting their portfolios too heavily toward one kind of asset