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Financial success, for a lot of people, isn’t something handed to them. It’s something that takes work. Not just finding the best ways to make money. But the strategies to make it grow as well. It takes a long time, a lot of learning and a watchful eye. You can’t take a hands-off approach to how you grow your money. But you can look at the tips we’ve put below to help you decide your strategy.
Preparing for emergencies
One of most important things you need to do, as soon as you can, is protect your finances. You do this by preparing for the little and big emergencies that can take out of them. Damage to your home. Losing your job. Getting seriously ill. Insurance can help you with a lot of these. Besides that, you should also put together an emergency fund.
Diversifying savings account
Then there will be the money you want to put aside in savings accounts. Money put aside for reliable, but slow, growth. There are different kinds of savings accounts you should be using for different reasons. Using them for medium-term savings, such as a holiday, or long-term savings, such as a child’s college fund. Do your research on the accounts available to you and decide which applies to which goals.
Your credit
Pushing for even further growth to your finances often means that you have to put investments in. Whether it’s a car, a home or starting a business. For a lot of these, you’re going to need loans. Loans and credit are not something that have to be avoided like the plague. In fact, they can be used very well. Just make sure you pay them as you’re supposed to, so your credit offers you even better deals in future. Investopedia.com and similar sites can help you take care of your credit.
Your assets
As we’ve said, the assets you buy can be a great way to invest your money. For a lot of people, this is all about property. Property investment can pay you back through selling or renting. It’s not entirely impossible for it to be a way to grow some real riches. You just need to make sure you make the effort and spend the resources to invest in them.
Investment opportunities
Speaking of investments, building your portfolio is really the surest way to do it. For a successful portfolio, you should be diversifying. Use sites like goldbullioninvestment.org to find the latest opportunities on great investments. Then look for other ones, too. Spreading your investments out lowers the risk to your finances, even if it doesn’t always offer the fastest growth.
Your retirement
If there’s one thing you don’t want to risk, it’s your retirement. No one can or should be working into their old age. So regardless of what you’re doing, see if you can do more to contribute to your retirement. That way, regardless of how successful your other ventures, you’re not left without a penny in your future.
I completely agree about the “assets” being a long term strategy to success. I personally don’t think you can get higher returns anywhere else than in buy-and-hold rental properties. One of the reasons I’ve been buying one every 2 years. As to the emergency fund, I think it really depends on how ‘bond-like’ your income is. I.E. – If you have a steady paycheck that isn’t going anywhere, you probably need less of an emergency fund than others. Cheers,
Passive Income Dude
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Hi PID,
A lot of our fellow bloggers are into real estate investing as you are. Rental properties can, indeed, offer a great income stream for many, many years but it does come at a price. Rental properties are a lot more hands on than managing dividend income. I’m not against rental properties I just am not ready to be a landlord I guess. How are you managing to buy a property every two years? That sounds like you’ll have a pretty big portfolio of properties come retirement time. Thank you for stopping by and commenting.
Nice list of strategies — I would say the credit category can be good and bad, and one should be very selective with it. Generally speaking, mortgage is a good “credit”. Similarly, credit to help fund a business startup may be “good”. On the other hand, having credit card debt can be a big drain.
Take care
FerdiS, DivGro
Hi FerdiS,
Some take the approach that ‘credit’ or ‘debt’ as another term are always bad. Sure, a mortgage comes with some benefits as mortgage interest can be deducted come tax time and it’s a debt that is going towards an asset. An asset that you can live in, can appreciate and can even provide an income stream if rented but it still must be managed very carefully. How many people have lost their homes during the last big recession because of excessive “good mortgage credit.” Thank you for sharing your thoughts.
Great tips, especially about the emergency fund! That is one part of my strategy that I need to address, I’ve been concentrating too much on diversification of my portfolio that I forgot about emergency funds. If something happens I do not want to touch my portfolio and it did give me something to think about. Thanks again Div Hut!
Hi DL,
The emergency fund always seems to be overlooked. For many, it looks like dead money as it just sits there collecting near zero for a “just in case” scenario. But, as you mentioned, it can come in handy when those emergencies do inevitably come up and you have the cash to tap instead of being forced to raid your income portfolio. Cars and appliances break down, injuries occur, etc. You just never know. Thank you for commenting.