WAYS OF PUTTING YOUR MONEY TO WORK

If you are trying to grow wealth, you likely know that making your money work for you is the best way to do so. As your income increases, you can put more toward investments that will help you grow your wealth. There are a few ways of doing that.

You have likely heard of crowdfunding already. It involves giving money to another person to help them reach their goals, whether that’s raising money for a trip or starting a business. However, investment crowdfunding works a little differently. The 2012 Jumpstart Our Business Startups (JOBS) Act allows investors to help businesses rise capital. Anyone can invest in a new business and even real estate. Crowdfunded real estate companies like Arrived are making it easy for anyone to dabble in rental properties. By buying shares of properties, it allows you to easily invest in rental homes. You’ll earn income and appreciation, which is especially helpful if you want to invest in rental properties but do not want to buy a whole home or deal with the operational expenses. You can browse homes, select one, buy shares, and earn income and appreciation.

Another option for putting your money at work is to get a real estate investment trust (REIT). It means you don’t have to take on the risk of property ownership. The only risk is to the money you choose to put into it. You’ll take on any gains or losses related to that property, and the company will pay you dividends. Of course, you will need to look into how this is taxed, as it could change your tax bracket. You can use a broker to purchase shares, or you could get shares through a mutual fund. Do your research to determine how much risk you are comfortable with. Your financial advisor can help you determine the right type for you.

One of the best personal finance tips is to look at any tax advantage methods of investing since this can make your money work for you. Both an IRA and a 401(k) allow you to save up for retirement. You will not need to pay taxes on the money you are putting into the account or the interest on the funds as they grow. This can put you in a lower tax bracket during your prime earning years. Once you have retired and are paying taxes on the withdrawals, you will most likely be at a lower tax bracket. This can reduce your overall tax burden, allowing you to keep more of the money you have earned. Try to take advantage of any employer match and gradually increase the amount you put into the account.

You don’t have to purchase shares if you feel you have the capital are ready to purchase a whole property. Real estate is one of the top choices for many individuals wanting to get a long-term return on their funds. You will usually need to have more capital upfront than if you were putting money in the stock market or a 401(k). That’s because you will need to make a down payment on the property you choose to purchase.

Of course, depending on the property, you might be able to get away with a low down payment mortgage and putting as little as 5 percent of the value down. The money you are bringing in from tenants should exceed the expenses of mortgage repayments or other expenses. The monthly income can compensate you for the time it takes to manage the property. Owning real estate as a rental can benefit you as far as taxes go, so if you pick the right property in a decent location, this can be a tax-advantage way of watching your money grow.