The following information is a simple strategy that will add diversification and simple ways to earn a decent rate of return for your hard earned money. Please invest at your own risk.
1.) Money Market Account (Risk: Low)
Opening a money market account is very easy. The first thing to look for is a bank of investment service that has a low opening requirement. Most retail banks have outrageous $10,000+ amounts for such an account. Paypal is my favorite Money Market account with one of the most liquid forms of withdrawal. It is a fund where the managers invest in other strategies and funds to earn you a decent return with lower risk. There average is usually above the savings account rates by at least 4 fold. Currently at 5.05% and savings accounts vary around less than 1%.
This is a good medium to put your float money. Cash you know you will need in 2-3 months or excess cash you would like to keep close and secure.
2.) Prosper.com – Micro lending
If you have not already heard of this site, it is amazing. I am not trying to acquire more group members and loans for my group by this article, and therefore I will not post my groups name. This is an amazing tool that will help you build a true wealth portfolio for the future.
You are the “lender” in a sense. You see what people are asking for and bid on their loans. Typically 100 or so lenders come together to fund the loan. So you can add $100, another lender $1000, and another lender $50 and so forth till the loan is 100% funded. You are able to see their credit grade, history of debt, delinquencies, and much more.
Typically you can make between 13-15% if you balance your risk correctly. No risk can be solidified around the 10% margin if you place small bids in lots of loans. I currently have a safe spread portfolio with a 17% rate of return. The loans are no liquid. You must hold onto them for three years. Interest and principal are slowly paid over time till the loan is complete. If you reinvest your cash every month and have a ROI of 17% the re-investments will turn your ROI somewhere near 19.5% before taxes. Which means you can double your money in just about three years give or take.
My recommendation is to place funds in Propser.com that are for your future. Leave the funds in there for a good 5 years. Keep adding to it every month, around 0.5% of your annual income and you will see a huge nest egg after five years.
Chiefly federal and state bonds. Why, two reasons. Safety and Taxes. It is almost impossible for the government agencies to bankrupt the bonds, if they do we must be a dead economy and this is not the worst of your problems. Usually the government will take out more bonds to pay for old ones. Second, most municipal bonds and such are tax sheltered, an incentive. Which makes the low interest rate worth the investment. Typically 5 years is the minimum investment.
These are three simple tools to help you build your money slowly and safely. You as the reader are at your own risk and this information is provided freely to benefit anyone looking to grow their money.