When I was in my 20s, I didn’t take personal finance seriously. Every time I got paid, I spent most of my money on things I didn’t need. I also had a credit card and got into debt because I couldn’t pay the balance due to a job loss. Now that I’m in my 40s, I have been educating myself about money management. I learned that to build wealth, saving money isn’t enough. I have to do more than cut expenses. I now understand that I need to grow my money with wise investments. Let’s learn how to grow your money beyond savings accounts.
Dividend Paying Stocks
Dividend stocks are excellent for growing wealth over time. Companies pay you dividends for buying shares of their stock. The good thing about dividend investing is that you don’t have to do anything to receive them. All you have to do is buy quality dividend-paying stocks and let your investments earn money for you. If you don’t have time to research individual stocks or are not knowledgeable about certain companies, buy index funds and exchange-traded funds. These are baskets of quality stocks you can buy to receive quarterly or monthly dividends.
Invest in High-Paying Skills
One of the best investments is high-paying skills because it’s through these skills that you can boost your income. When you increase your income, you’ll have more money to save and invest. Consider your interests and research in-demand skills and careers that align with them. Get the necessary certifications and seek out opportunities related to what you learned. Some good, high-paying skills to pursue are:
- Data analysis
- Web design
- Artificial intelligence
- Cybersecurity
- Copywriting
- Graphic design
- Skilled trades (plumbing, cosmetology, and electrician)
- Project management
Certificates of Deposit
Certificates of deposit are a type of savings account offered by banks. You open a CD and deposit a certain amount of money into it. You can choose a 3-month term CD, a 12-month term CD, or even a CD that lasts three years. Most CDs have fixed rates, and this makes it one of the safest investments to have. When your CD matures at the end of your chosen term, you can roll it over into a new CD, withdraw the funds, or transfer funds into a different account.
Invest in REITs
Real estate is a neat way to grow your money, but not everyone wants or can become a landlord. This is where real estate investment trusts come in. Real estate investment trusts are a type of dividend-paying stock that centers around real estate. REITs are required to pay shareholders 90% of their profits. Many REITS pay out dividends monthly or quarterly.
Not all REITs are created equal, and some are of better quality than others. Quality REITs consistently grow their earnings, and it generally comes from higher revenues and gradual rent increases. Buy REITS from companies that have solid management teams. This matters because a good management team will find creative ways to improve their facilities and services for tenants, which means more profits.
REITS represent diverse sectors of real estate, and some sectors perform better than others. It’s not wise to buy REITS that are focused on malls and shopping centers since many people shop online these days. However, REITS that concentrate on industrial and data centers tend to perform well, so you should add these to your portfolio.
Grow Your Financial Future With a Roth IRA
Don’t forget about retirement when growing your money. A Roth IRA is one of the best retirement accounts and here’s why. All contributions, interest earned on those contributions, and withdrawals are tax-free. If you’re in your 20s, now is the time to invest for your retirement. Start by opening a Roth IRA through a brokerage account such as Fidelity, Vanguard, or Charles Schwab. Make an initial deposit and automate a portion of your check every pay period to this account.
A 529 Plan for The Kiddos’ College Education
Building wealth goes beyond you, it should extend to your kids. One great way to do this is give them the chance to attend college debt-free. A 529 college savings account is when you deposit money and invest those funds for your child’s college education. With these savings, your child may not need to take out hefty student loans once he begins college. He can use his 529 plan for tuition, books, and other college expenses.
Health Savings Accounts
Medical debt crushes your long-term financial goals, and you can grow your money while covering medical expenses through health savings accounts. Health savings accounts are accounts where you deposit and invest funds for qualified medical expenses. All contributions, interest earned on them, and withdrawals are tax-free as long as you use them for only medical expenses. Only individuals with high-deductible health plans can open an HSA. You can use this account even into retirement.
Treasury Securities from the U.S. Government
These safe investments should belong in everyone’s portfolio. Treasury securities come from the Department of the Treasury, and they can boost your wealth over time. Treasury bills are one type of security, and they usually mature within a year or less. Treasury notes are securities that mature in 10 years and pay interest semiannually. Treasury bonds mature between 20 and 30 years. Finally, there are treasury-inflation protected securities, known as TIPS. These are offered in 5, 10, or 30-year terms.
The key takeaway is that strategic financial planning goes beyond simply saving. By actively seeking out higher-yielding alternatives and embracing smart investment strategies, you can position your money to outpace inflation, leverage the power of compounding, and ultimately secure a more prosperous financial future.