Living in the moment may seem easy, fun, or even necessary, but as the years pile up, you’ll need to begin exploring different ways to grow your money for the years ahead. Of course, you can’t start growing your money until you have good soil to grow your seed in.
Cut the unnecessary expenses like excessive takeout, video game microtransactions, and that television subscription service you forgot you had, and start putting that money to work.
Self-Directed IRA
Investing for retirement through nothing but stocks and bonds can feel a little stodgy. For a more freestyle strategy, financial planners offer the self-directed IRA, which, since 1997, has allowed for an expansive approach to diversified investing that the traditional IRA does not provide.
A self-directed IRA can allow you to save for retirement through alternative strategies, such as promissory notes, precious metals, real estate, and even the emerging field of cryptocurrency.
Self-directed IRAs are available in the traditional tax-deferred configuration as well as the Roth IRA, which taxes contributions upfront to provide tax-free distributions in retirement, making this creative strategy particularly appealing to middle-class investors.
Mutual Funds
As self-directed IRAs demonstrate, diversification is the key to investing—in other words, don’t put all your eggs in one basket. For a less deferred payoff than a retirement account, investing in mutual funds can build up your savings slowly and steadily.
A mutual fund invests in a diverse array of companies that other investors, in turn, buy into. This spreads the gains and losses of the fund’s portfolio among the investors in what, ideally, ends up as a modest gain overall.
While mutual funds represent a smoother alternative to the rollercoaster of direct investments in stocks, the management fees that attend mutual fund investment may dissuade some potential investors. Those who fear that such fees will immediately swallow up those modest gains and leave them right back where they started may be more comfortable investing in more self-directed ventures.
Real Estate
Whether through an IRA or a configuration that allows for more immediate access, property investment and management can—after some upfront time, money, and labor—lead to a comfortable and reliable stream of passive income.
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Foreclosures represent opportunities for middle-class investors to pounce on real estate and turn distressed or undervalued properties into reliable revenue generators. Managing the property once you’ve acquired it could be something you’re willing to outsource to a professional property-management firm at the expense of some of that revenue.
However, many real estate investors find out the hard way that the day-to-day rigors of property management are simply not for them. Still, if you find that this different way to grow your money is really for you, it could even grow from a simple side hustle into a vast real estate mini-empire.
Image Credit: different way to grow your money by envato.com
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