Money Smart: Practical Ways to Grow Your Fortune

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2020 was a tough year for everyone, especially for the financial markets. Yet, 2021 has not shown a big difference from how the markets performed from the previous year. Many people have lost hope in investing their money, yet this could be the perfect time for adjustments in your current portfolio. Here’s where you can put your hard-earned money to work.

1. Build your cash.

While stocks are great investments, the market is still volatile. Since there is no sure way to counterbalance losses in stocks, having cash is still a wise choice. Cash can maintain its value even in the midst of chaos in financial markets. It also serves as capital so that you can buy stocks and other investments.

It can indeed be a challenge to earn returns in interest-bearing investments. Yet, cash reserves provide liquidity. While it can’t provide heft returns, it will help prepare you for the next big investment.

2. Invest in real estate.

If you have the budget, why not invest in real estate? That house and lot nearby could be the right investment option for you, especially if you are looking into developing a passive income source. Real estate would be great to add to your investment portfolio. Despite the pandemic, more and more people are investing in real estate. While many have downsized into smaller homes, more people have purchased new properties. Mortgage rates are at their all-time low, and you could benefit from this.

You can turn this property into rental housing. This is a great investment for people who want something long-term while generating regular cash flow. While it seems that not a lot of people would be attracted to renting a property, many solo dwellers are looking for a place to stay even at the height of the pandemic.

Another smart way to invest in real estate would be to go for real estate investment trusts (REITs). People who have cash on hand can avail of REITs at a much lower rate. Moreover, investing in real estate can be your fallback to stocks in the financial space.

3. Pay off your debts.

Paying down or paying off debt is a great investment you can take during this financially challenging season. Just like building your cash, escaping debt is a great way to prepare you for bigger financial challenges and wins.

Many credit card companies have lessened their interest rates to encourage more people to pay their bills. Moreover, it is not practical to carry credit cards if your job or business would remain in limbo in 2021. The more you stretch paying off your debt, the bigger the fines you will have to deal with eventually.

Paying down or paying off debt can help you achieve your financial goals faster than you can imagine. This will work to your advantage as you can increase your retirement fund or launch your business as you resolve your debts.

4. Put your money in your retirement savings plan.

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Retirement could be something that would not cross a young professional’s mind, but it is something to consider in the long run. While a retirement plan is not an investment, it can be a good way for you to grow money so that you can invest more. As retirement contributions are tax-deductible, the investment income that comes to your account can be tax-deferred. With this advantage, you can start your retirement plan or put more into your contributions starting this year.

5. Strengthen your skills.

Strengthening your skills can be considered an investment, too. By taking on classes or certificate programs, you can be better at your current work. This can increase your chances of getting promoted or landing better jobs in the future.

6. Build a side business.

Just like a retirement plan, a side business would not seem like a typical investment. Side businesses usually start from hobbies and talents. However, it can be an actual investment as it can provide another stream of income. It is also a great way to invest in improving one’s talents and skills.

Having a side business can help one expand their budget for paying off debt or increasing savings. It can also help one increase contributions for retirement savings. In the long run, a side business can turn into a primary occupation.

Change is a part of life that should be embraced. Implementing strategies that can improve your financial well-being, in the long run, will always be a great investment. Having better control of your cash flow can help you improve your life moving forward. Making better money decisions can also improve your quality of life.

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