Turning a little Money into a Lot

It’s often said that you need money to make money. Certainly it’s a lot easier to make a million if you have a million to start with. However, it’s important to remember that many millionaires worked their way up from just a few dollars.

There are, basically, three ways to turn a little cash into a lot of cash. The first is via high interest savings account – either CD’s, saving bonds or a similar government backed and guaranteed scheme. This is a slow but safe way of making money. It could easily take 40 or 50 years to turn your few hundred dollars into a few thousand, but you’ll be able to go about your daily life knowing that your retirement is sorted and you won’t have to rely on the generosity of your kids.

The second way to turn a little money into a lot of money is to invest it or loan it. Essentially, you back an individual or company who promises to return the original loan, plus more. Websites such as zopa.com allow you to loan anything from 10 to 25,000 (on the UK site – there is an American one as well) with an average rate of 7% pa. You can also invest in companies by buying stocks in them. This gives you a right to a share of everything they own, and the right to cast a vote on their business direction. Should you pick a winning company, your initial investment can easily triple or quadruple in value in just a few months. However, there is no guarantee, and it is very easy to lose a lot of money, very quickly.

The third way to turn a little money into a lot is to start your own business. In this way, you will have ultimate control over the direction and business decisions taken. You will also take the lions share of the profits made. With the advent of the internet, starting and running a company has never been easier or less expensive. It does require, however, the correct mind-set. You need to be committed, passionate and a good salesperson – or great at recognizing talent in others.

There are numerous variations on each of these methods. You need to consider the country in which you are living, the level of risk you are willing to accept, and the rate of return you need. Generally speaking, the higher and faster the potential rewards, the greater the level of risk. If you do choose to invest or lend, you should usually try and diversify as much as possible, so that if you lose one portion of your initial capital, you don’t lose everything. Never, ever invest money you cannot stand to lose. Don’t go into debt to finance a start-up. Don’t spend what you don’t have!

It is usually a good plan to begin with slow and steady savings, and, as your level of capital increases, move into the riskier money making schemes. In this way, you safe-guard your standard of living whilst still continuing to progress.