6 Ways To Make Money Work For You

Ways To Make Money Work For You Time and again we come back to an amazing truth about our economy and system of working. Typically the hardest working folks make some of the smallest paychecks and the rich typically get richer. One way to address this is simple in my opinion: harness the power of making your money work for you. This is the secret power of the wealthy. They have just as many hours as any other human on the planet. You might even be better educated. But the key question is are you making your money work for you in the most effective manner possible?

Critical Mass

I realize in the beginning this is all very hard work. It is hard work to go from zero or even a negative net worth and build it into something substantial. For most of us, it takes decades of disciplined/automated investing/saving and several good choices to build some wealth. This is why in the beginning I think someone should focus on building what we call “critical mass”. It is a stage of accumulating quality assets. This could be in the form of savings, bonds, stocks, mutual funds, exchange traded funds, dividend paying stocks, real estate investment trusts, equity in real estate crowdfunding, real estate you own and manage, stakes in businesses you operate, etc. The point here is to start. It could mean squeezing into that first starter property. It could mean pumping as much as possible in your company 401k (with low fees and diversified investments), it could be picking up shares of stable dividend aristocrats, etc. You go off and live your life. If you keep the debt levels and lifestyle inflation in check, you wake up 10 years later and probably have some small fortune cobbled together. This is the beginning.

The Dollar Employee

Now it is time to think about each one of those dollars invested as your little robot employee. Those dollars start working hard for you and spinning off income. From here we have identified 6 ways to make money work for you. Remember, the rich really do not work for money. They have so much capital and investments, that the money works for them.

1. Dividends

I love dividends and the reason is simple. You can literally go onto Robinhood or whatever platform you like right now, buy a share of Abbvie, STOR, “O” Realty Income, etc. and that share of stock will pay you each month or quarter without you doing anything. You do not need to work for these companies, you do not need to sell anything, you don’t need to do anything except watch dollars get placed automatically in your account. Literally a 4 year old could do this and I am not sure why more people don’t do it. Now of course there is risk. Without risk there is no reward. The company could hit a rough patch or go out of business and you could lose your investment. BUT, if a person picks mainly Dividend aristocrats or better (dividend paying companies that have consistently paid for decades) the chances are pretty slim that you will lose your investment. The reason is because these companies have demonstrated an ability to turn a profit in all kinds of environments. They have proven to have a quality product that people desire or require. And they have built “wide moats” to protect their business from competition. The main takeaway is that this represents money working for you.

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Dividend Advantage The Power of Dividends & Having Fun

2. Real Estate Investment Trusts

Everyone knows how nice it would be to own a property free and clear and rent it out for monthly profits. Only problem, it takes a huge amount of up front work, labor and capital to get that system going. Not to mention it takes time to manage the tenants and property each month. In other words, obviously real estate is a great way to make your capital (money) work for you while you sleep. And we have talked about all the ways. And owning traditional real estate and renting it out makes your money work very hard for you. For one, there is cashflow every month. Secondly, the value of the underlying asset rises over time. But, if this is not an option, then a person could consider using Real Estate Investment Trusts (REITs) as a way to make their money work for them. These companies own and operate rental properties and by law must send 90% of profits back to shareholders via a dividend. One thing I love about REIT’s is no hassle. They are purchased through publically traded shares. Some companies like Realty Income (TICKER “O”) actually pay the dividend monthly. At the moment it pays about .23/share each month. Therefore, buy 300 shares and instantly receive about $70/month in dividends. It could literally take a few minutes to complete this transaction, then you just sit back and watch $70 get dumped in your account…

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Real Estate Investment Trusts

3. Automation

Never underestimate the power of robots and automation in all aspects of life. I have added this to ways to make money work for you because it is absolutely critical to building wealth for 99% of us. The reason is simple: We have monkey brains that only live in the moment and are not disciplined enough to save/invest for the future. SEE RELATED: Monkeys With Money Most millionaires are made by consistently investing small amounts of money each and every month for 20, 30 or more years. Fees must be kept low as they can eat into returns in big ways over time. Even a few percentage points here and there of fees adds up to hundreds of thousands of dollars over the years. SEE RELATED: 7 Ways To Build A Robot Wealth Building Army Back in the beginning of my career there were not as many automated options. There was one through my employer, but beyond that it was a new concept to have money automatically invested each month. I remember writing out a check to Vanguard every other month for a few hundred bucks to pick up a few shares of mutual funds. Now there are literally dozens of ways to automate investments. Putting these systems in place has the added benefit of harnessing the power of dollar cost averaging. In other words, when the market does it short term dips here and there, your regular investment at that time actually buys more shares. The bottomline is to make your money work for you it has to be directed into the right places. Automation helps direct your capital into places that put it to work.

4. Destroy Some Debt

Most of us have some debt. We take out loans to go to school, we take out loans to buy a car, a house, clothes, etc. In my opinion, there are two key strategies to manage debt to maximize the power of money working for you. First, is the debt load appropriate? In other words, are you taking on too much that it becomes overwhelming and destroys the financial house you are building. If someone has $150,000 in school loans, a $800,000 mortgage, a $40,000 car loan, $30,000 on consumer credit cards, etc. This is absolutely a wealth destruction monster. The bottomline is that these high debt loads will make it impossible to have money working for you effectively. So are the figures appropriate given your income and contingency plans? Secondly, I ask if the debt is for an appreciating asset or is it a wasted expense. For example, debt taken on for a house or an education can actually assist with building wealth over time. This is because the house may go up in value while the debt load is paid down, creating equity in the property. An education may lead to a higher quality higher paying job. On the other hand debt for a car is money sunk into something that only goes down in value (unless it is a classic car or a Tesla as Elon Musk claims). Elon recently said that Tesla’s may become appreciating assets due to their ability to upgrade themselves over time with software updates. Whether you believe this or not it is an interesting concept. Debt for vacations, clothes, coffee is all fine for the moment, but none of that value will ever return to you in the form of a return on capital. Perhaps you are ok with that, but remember it is a choice that has long term consequences when it comes to finances.

5. Reinvestment Plans (DRIPS)

One way to supercharge making money work for you is to have the money you earn on your money make more money! This is simpler than it sounds. Let’s say you own a dividend stock like Pfizer, Abbvie or Realty Income. Each quarter or month the company will send you a certain amount of money for each share you own. For example, Let’s say Realty Income (Ticker: O) sends about 25 cents per share each month. If you own 300 shares, they will send a person $75/month. At this point you have a choice, you can either collect the $75 and use it for a nice dinner out, or you can have the $75 reinvested to buy more shares of O. That would buy about one more share of O each month, therefore at the end of a year, you would have another 12 shares of O. Those 12 extra shares now also produce the 25 cents a month dividend. That means another $3/month in income, increasing the monthly income to $78/month. This can continue on forever and lead to some great returns on investment.

6. Options Trades

As many Money Viking readers know, Jerry does a great job managing various options trades each month. If done right, this can be a great way to leverage your existing capital. Please see our many posts on options trades or go to tastyworks for an amazing platform and information. Options allow a persons to use odds and probabilities to make short term investment decisions. We at Money Vikings use tastyworks for trading options. If you are interested in checking it out, we’d appreciate you using our affiliate link

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