TLDR:
- Create a high-interest savings account to provide you with a secure and low-risk way of earning back on your money.
- Purchase Certificates of Deposits (CDs) with maturity periods that are relevant to your financial goals.
- Invest your money strategically according to what your risk tolerance is in assets such as stocks, bonds, and mutual funds.
- Create an Emergency Fund for when life happens.
- Hustle on the side to generate passive income.
How you can best maximize the money to your name
As we all probably know, money is the most liquid asset, whether in the form of cash or a savings account. Money can lose its value just as fast in relation to the health of the economy, further amplified by if it's just been sitting in your bank account all this time.
It’s not a bad thing to have money saved up, but as we explain in this article, there are also ways you can reinvest that money to exponentially grow some of that money, and we’ll explain 5 of those methods.
1. High-Interest Savings Account
Such accounts offer higher interest rates than standard savings accounts, providing you a secure and accessible way to grow the money in your bank account.
To make the most of this:
- Look for banks and credit unions that offer high interest rates
- Set up automatic transfers from your checking account to your high-interest savings account
- Regularly review your account to ensure you’re getting a competitive rate. If this is no longer the case and a rival bank or credit union is offering a better rate, perhaps consider transferring your savings.
Overall, a high-interest savings account is a low-risk route compared to most routes you can take.
2. Certificates of Deposits (CDs)
A time-bound savings account that offers higher interest rates than a savings account, to maximize its benefits:
- Select the right term, as CDs come with different maturity periods such as 3 months, 1 year, and 5 years. Choose the one that aligns with your financial goal.
- Create a CD ladder by opening multiple CDs with staggered maturity dates. This strategy allows you to have access to funds at regular intervals whilst continuing to earn at a high-interest rate.
- Compare CD rates from various financial institutions to ensure you’re getting the best rate possible for the CD you choose to invest in.
Just like a high-interest savings account, CDs are low-risk as they offer a guaranteed return on your savings.
3. Strategic Investing
Investing your money is a strategy that can potentially yield significantly more exponential returns than the two aforementioned methods thus far. But, it’s high risk as there are several other factors you have to nail to be able to make that potential a reality, such as:
- Deciding how big a risk you’re willing to take with your money given your goals. Consider a vast portfolio of stocks, bonds, or mutual funds that align with your risk tolerance.
- If you’re new to investing and can afford it, seek the advice of a professional financial advisor who can guide you in building a balanced and vast portfolio.
- Regularly contribute a portion of your savings to your investment portfolio to take advantage of dollar-cost averaging.
- Be open-minded about the long-term (as most if not all major investments should ideally have that in mind), and look to avoid impulsive investment decisions based on short-term fluctuations (like GameStop).
4. Emergency Funds
As we mentioned at the beginning of the article, it’s not a bad thing to have money saved up for a rainy day, as life happens when you least expect it. It’ll provide a financial safety net for unexpected expenses so you’re not inclined to take money out of your savings account.
To manage one effectively:
- Save for at least 3-6 months’ worth of expenses at the bare minimum, adjusting based on your circumstances and comfort level.
- Keep the funds as liquid as possible, like the high-interest savings account.
- Regularly review the size of your emergency fund and make adjustments according to changes in your financial situation or life circumstances.
This may not seem like a method that’d necessarily help with exponentially growing your money, but it’ll help in protecting long-term savings and investments to remain untouched until its time has come.
5. Side Hustles and Passive Income
A very proactive method is with side hustles that’ll help you generate passive income. To do so:
- Identify skills or talents you possess that are monetizable.
- Once you have, explore how you can utilize that to create a passive income stream. This can be going on forums like Reddit to see if people are looking to pay for your expertise, signing up for platforms like Freelancer, Fiverr, and Upwork.
- Establish an online presence on all major social media platforms. It is also a way you can not only also get commissions, but make it easier to build a relationship with your customers by regularly engaging with them.
- Build your personal brand so you stand out even when you’re not working. You can download our free eBook to learn how you can use ChatGPT to boost your personal brand
- Set saving goals by dedicating a portion of your passive income to your savings.
Akin to building your business, exponentially growing your money is just as difficult. All it takes is time, effort, consistency loving, and trusting the ins and outs of the process. Remember that results will not be seen overnight, it takes time to build.