Do you want to learn how to make your money grow? Do you feel that saving money in the bank is not gaining any traction as far as your wealth management efforts go?
There are many reasons why saving money is not enough. This doesn’t mean that making bank deposits is no good. But if growing your wealth is your goal, you mustn’t stop with saving in the bank.
A recent survey revealed that 58% of Americans have less than $1,000 in their savings accounts. Though this is better than having no savings, it will be very hard for you and your family to live comfortably in the long run.
So how can you grow your wealth effectively? Continue reading below as we give you some of the best tips you must follow.
The Need to Invest
Let us first discuss the value of investing. If you want to learn how to make your money grow, you cannot succeed without the element of investing.
As we mentioned earlier, sticking to savings alone will not cut it. The value of your savings will erode long term. This is because of the fluctuating inflation rate.
Sure, you know your money is safe in the bank. But the unseen enemy that is inflation slowly eats up the value of your savings. When inflation goes up, it will eat up the value of your savings.
Essentially, the real value of your money declines as the years go by.
If you are saving up for something that is only a year or two away, your bank deposits may be enough. But if you are aiming for something more significant like a new house or securing your retirement money, then there is no other way to go but to start investing.
One of the biggest reasons why investing can grow your wealth faster is compound interest. Compounding means earning interest on the interest that your money already earned. You can experience the power of compounding interest using different investment options.
How to Make Your Money Grow
With the need to invest already clear, we can now look into some of the best tips that will help you grow your money faster. Let’s try to break them down one-by-one below:
1. Track Your Money
Before you invest your money on any instrument, you must first keep track of it. This means taking control and monitoring your spending, savings, and eventually your investments.
First, you need to create a budget. If you already have one, you must follow it strictly by making a plan that revolves around it. This plan must tell you how much you will spend (and save) every month.
Thereafter, track your spending and see if it aligns with your plan. When it comes to the actual tracking, several apps and programs turn the task into a breeze. But if you are the old-school type, you can always opt for the reliable Excel sheet.
2. Learn to Pay Yourself
The next powerful tip you need to practice is paying yourself first. This means treating your monthly savings as part of your expenses. This involves setting aside a portion of your salary from each paycheck and placing it automatically to your savings and investments.
This may be hard at first but if you can arrange an automatic transfer from your payroll to your savings account, do so.
Your mindset must be the same as the way you look at your monthly utilities. You must look at your savings and investments as a monthly expense that you must settle.
3. Eliminate Your Debts
If you do not have an investment yet, you must not start one until you eliminate your existing debts. Do not fall into the trap of settling existing debts by acquiring new debts.
Start with your credit card debt. Keep in mind the monthly interest is what will put you in a deep debt hole. Make a vow to yourself that you will stop entertaining any debts unless it is a matter of life and death.
As much as you may want to start investing, restrain yourself until you put to bed all existing debts. You will thank yourself in the end for doing so.
4. Diversify Your Investments
One of the secrets to maximizing your investments is diversification. This means not placing all your eggs in one basket.
There are several types of investment options available; each one offering its strengths and weaknesses. The key to successfully diversifying your investments is understanding your risk appetite.
If you are still young and exploring, investing in stocks is a good option. The challenge with stocks is volatility. You can make lots of money but you can also lose a lot in an instant.
If you are the more conservative type, you can invest in government bonds. Bonds offer low to medium returns at low-risk levels.
You should also consider talking to your bank and ask them about their investment products. Also, don’t forget to buy insurance especially if you already have a family or plan to have one soon.
5. Practice Consistency
Once you start investing, you need to practice consistency. You need to invest every month and sustain it.
There may be instances when circumstances call for unexpected expenses. When this happens, examine your budget plan. Give up some of your expenses to sustain your investments.
6. Residual Income Counts
Last but not least, investing becomes easier in the long run if you build a residual income stream. This is something that you may not be able to start right away. But if you have assets like real estate sitting and doing nothing, use it to generate extra income.
Open your vacant lot for the public to rent. Thereafter, use the monthly income it generates to top-up your investments. You may also consider investments that pay dividends.
Let Us Help You Grow Your Money, Today!
Knowing how to make your money grow is one of the best lessons you can learn. Not only will it help secure your future, but it will also pave the way toward financial freedom.
If you’re looking for reputable people who can help kick things off, we will be more than happy to help you out. We offer an extensive lineup of personal banking instruments to start the ball rolling.
Talk to us today and let’s take the first step toward growing your money.