When your money works for you, you can increase your capital and generate income with minimal effort. In fact, many people are able to facilitate passive gains and enjoy lucrative financial growth without putting in much effort at all.
Of course, finding the best way to make your money work for you can be the trickiest part. With these handy tips and techniques, you can recalibrate your financial management and use your money to increase your wealth:
Secure a High-Interest Savings Account
Savings accounts may not offer the highest return but they’re a secure way to guarantee growth. By choosing a high-interest account and making regular contributions, you can boost your capital. Over time, this can grow to a significant amount, depending on the amount you’re able to deposit and the interest rate you can secure.
If you won’t need to access your cash for a while, choosing a fixed-term savings account can help you to get the highest interest rates. However, these accounts typically lock your money in for a set time or charge you a withdrawal fee if you need to access your funds early, so do be sure that you won’t need to touch your capital if you want to maximize growth.
Trade in Forex
If you’re looking for an investment opportunity that offers higher returns, trading on the Forex market can be extremely lucrative. However, it can be a relatively high-risk form of investment, so you’ll want to do your research first. By learning how the market works, getting technical analysis in Forex and staying up to date with world news, you can make savvy investment decisions. Alternatively, appoint an investment manager to handle your trades for you and benefit from their professional experience and expertise.
Property can be a valuable investment, providing you buy at the right time and in the right location. By holding on to your new property and waiting for its value to increase, you can boost your capital. Similarly, buying a property, renovating it and putting it back on the market can help you to increase your gains.
In addition to this, you may want to buy a property and rent it out to tenants. This is a viable option for both commercial and residential buildings, and it can be a good way to generate income, as well as achieving long-term capital growth.
Become a P2P Lender
Lending money can be a great way to make it work for you, particularly if you’re able to generate a return by issuing a mid to high-interest rate. Peer-to-peer (P2P) platforms allow you to lend capital to borrowers with a pre-agreed interest rate. With the option to lend as little as GBP £5, this is an investment opportunity that virtually everyone can take advantage of.
Avoid Paying Interest
You’ll want to secure high-interest rates when you’re saving cash but avoid paying interest when you’re the buyer or borrower. If you have credit cards, a mortgage or outstanding debts, you can save money by negotiating better interest rates and terms. Alternatively, consider switching your accounts to alternative providers in order to access more generous interest rates and repayment terms.
Get a Financial Mentor
Learning from someone who has a successful financial history can help you to achieve the same level of success. Sadly, we aren’t taught much about money management in school, college or university, which means millions of people are missing out on the chance to increase their wealth. By finding a mentor you can trust, you can learn everything you need to know about improving your finances in the short, medium and long-term.
Reduce Your Tax Liability
How you arrange your finances, investments and assets has a major impact on your tax liability. Whether you’re an employee, director or a sole trader, there are ways you can reduce your tax liability and keep hold of more of your money. By seeking assistance from an accountant, tax adviser or financial planner, you can access the bespoke advice you need to restructure your finances and minimise your tax liability.
Create a Budget
People are often surprised to learn that the wealthiest people typically use budgets to manage their finances. However, creating a workable budget is an excellent way to manage your money, regardless of what your financial situation is. Whether you’re struggling to pay the bills each month or you’re not sure how much you should be saving every quarter, a budget can help you to reduce your outgoings and achieve your financial goals.
Plan Your Financial Future
Taking the time to plan your financial future can help you to hit your targets and keep you motivated. If you want to purchase a property within the next five years, for example, establish what you’ll need to do to make it happen. By breaking this goal down into smaller targets, you can ensure that you’re on track to hit your objective within your desired timeframe. When you’re making a plan, be sure to include as much detail as possible, as this will help to inspire and incentivize you.
Get Out of Debt
Although most people have some form of debt, reducing the amount you owe or getting out of debt altogether can transform your financial situation. If you’re paying high rates of interest, talk to your creditors and negotiate a better rate. If you have the option, you could also switch to a different type of account or provider. Transferring debt from a high-interest credit card to a card which offers 0% interest on balance transfers for 12 months could give you the opportunity to pay off the debt without paying any more interest, for example.
It doesn’t take long for debt to feel like it’s unmanageable, so don’t despair if your finances feel like they’re slipping out of your control. By seeking professional help, you can get the advice you need and start making your money work for you.
Pay into a Pension
If you don’t already have a pension, it’s time to explore your options. You might find that your employer will contribute to your pension as part of your remuneration package, which can be a great way to maximize the amount you’re saving. Although you won’t be able to access your pension until you reach a certain age, it can be one of the most effective ways to save for your retirement. By choosing to invest in high, medium or low-risk funds, you can balance the amount of risk you’re willing to take with the returns you want to see.
Buy an Annuity
If you’re looking for a low-risk investment opportunity, an annuity could be the right option for you. An annuity is a type of insurance that guarantees you a monthly payment, but you do need to pay for it upfront. Providing you pick the right annuity; it can be a good way of generating passive income. However, some annuities have high fees and relatively low-interest rates, so it’s a good idea to do your research before you decide which one is right for you.
Look into Estate Planning
No one enjoys thinking about what will happen when they’re no longer around, but estate planning is an important element of financial management. With advice from lawyers and tax planners, you can ensure that your savings and assets are used in accordance with your wishes in the future. Furthermore, estate planning allows you to minimise the amount of tax that will need to be paid by your beneficiaries, so it’s a way of ensuring that the people you love are able to receive the majority of your estate.
Become a Silent Partner
Starting a business can be a lucrative way to make money but it usually requires a lot of work and a significant degree of risk. When you become a silent partner, however, you can invest in burgeoning businesses and make great returns, without having to deal with the day-to-day rigours of running an enterprise. Of course, investing in a new business as a silent partner will still carry a considerable amount of risk, so you’ll need to be confident that your investment opportunity is a business idea that really has potential.
Further Your Education
If you’ve got a specific career plan in mind, investing in yourself can be an effective way to make your money work for you. Many job roles require specific qualifications or certifications, so paying for your course or degree program could enable you to climb the career ladder much more quickly. As a result, you can increase your earning power and secure lifelong returns on your initial investment.
Learning to Manage Your Finances
Changing the way you manage your finances can ensure that your money is put to good use. Instead of letting savings sit idle, for example, you can use them to generate income or to boost your capital. Although investments carry some level of risk, getting professional advice and doing your due diligence will help you to choose risk levels that match your financial goals. By doing so, you’ll have the opportunity to transform your financial situation, generate passive income and increase your wealth.