As my business grows I’m offered with a more mature question, I would like to invest my money…but where should I do it?
Investing in Your Business
Early on in your business, it’s great to use all your profits to further grow your business.
In fact when someone is starting out in an online business, I encourage them to spend as little as possible at first, unless they really know what they‘re doing and have plans to go big from the beginning. For a person starting with their first online venture go the shoe string budget route. Only when the business starts making some money should you invest further in tools and methods that will work to increase it.
Sure you may need a domain name and hosting but you can start taking orders for free with a paypal account instead of getting a paid shopping cart setup before you even have your product ready to sell. Get the money coming in, then spend more, in order to create more.
But let’s say you’re beyond that point, and your business (or even if you have a good paying job), is leaving you with enough money that you want to invest it somewhere. Where to start?
Getting Rid of Debt
First off, if you happen to have any debt, your best bet is to pay that down first and foremost. Especially credit cards. Just think about it. If you’re paying 20% or more in interest each year, you’ve got to do real well with your investments in order to even get close to that. That’s more then the average stock market return, especially in the last few years.
If you have lower percentage debts, like a home mortgage, it can be a different matter. But after struggling for years in debt, I like to be completely debt free now, and want to keep it that way. Of course, wisely investing in real estate where it can give you a positive cash flow by going in debt is a different matter, but that’s beyond the scope of this article.
So lets say you’ve paid off your debts and still would like to invest your money. There are a couple options here, that I’ve been looking at. I’m going to divide these into two categories.
The Two Types of Investments
1) Hands-off investments
2) Hands-on investments
I’m currently looking around at a variety of places to invest my money. Honestly, this is the end goal I’m looking for – a high rate of return, little risk, with no work. That would be optimal.
Hands on investments are great. But they do take up your time. Your business that you’re growing each day, that is an investment and its very hands on. That’s great! Keep at it.
Then you may also look at some other hands-on investments. Day trading would fit in here. But to do it right you need the right tools and to watch the stocks every single day. It can be profitable but its something you must learn well and spend the time to do. And be wary of spreading yourself too thin. Even just with an online business you can do that with too many projects.
So more of what I’ve been looking at lately is to transfer that income from my business, a hands-on investment, into something that has little or no work.
With this you have to realize you’re not going to get astronomical returns, unless you also delve into some risky waters.
Hands-Off Investing Option #1
But what could you do with a very safe 10%+ return on your money. Not bad right? Especially if its very safe and takes no work? Much better then any savings account, CD’s or treasury bonds. As long as you don’t need the money any time soon because its not liquid it’s a good trade.
This place is Lending Club.
The fact is right now I’m earning a 14.35% return.
The basics of how this site works is it’s a peer-to-peer lending site. People like you and me lend money out to other people like you and me. Lending Club is the middle man and they get their cut, but its often a good place for many people to go, if the banks turn them down, and to get a better rate.
I use to be on the other side of the fence. I borrowed from Lending Club in order to consolidate and get lower rates on my credit cards. It was a great service for that purpose and I would recommend people to check it out if they need it.
But now I’m looking to invest. (I find it funny that you can’t use the same account from when you borrowed to now invest. You have to create a new account for that purpose. I guess they figure most people who are borrowers stay borrowers, and lenders stay lenders, and they’re probably right, but I never considered myself normal.)
When you sign up and transfer funds in you’re able to fund any of the multitude of loans in there. They grade people based on their credit and give a percentage gain for each. Lower percentage gains for lower risk people. Higher gains for higher risk. In the end, with some defaults but your money spread over many different accounts, they say 93% of the people gain between 6-18% on their money. The remaining 7% gaining less then that.
I just put in $1000 to start and spread it out over 40 different loans at $25 a piece of all different grades. Easy diversification. To be honest I didn’t even read a single listing, so I spent all of about two minutes on this.
Hands-Off Investing Option #2
The second place I’m putting my money into is silver. Yes, the precious metal.
From my research it looks like silver could be going way up in price in the near future, and has more potential then gold. Just looking at the historic price chart of silver you can see what an investment 10 years ago would now be worth.
I’m buying physical silver, but in order to do this you need to gain some knowledge of what’s a good deal and what isn’t and then spend some time on it. An easier way, and that I’m also using is AutomaticSilver.com
You can setup an automatic savings plan that invests you in silver (also gold is available). It’s really easy to do.
Now should you put all your money in here? No. But even if you put a little money away, automatically, over time it will grow into much more. Silver doesn’t pay dividends or any sort of annual yield, which makes some people steer clear of it. But the potential for some big gain is there, as its used as an industrial metal as well as just for coins and jewelry.
And the truth is any sort of set it and forget it savings plan is a good bet, for letting your money continue to grow over time.
These are just two ideas of many. There is also the more common one’s of real estate and the stock market. The real estate is a hands-on venture. The stock market can be hands-off depending on how you work it, but you still need to investigate the best funds or stocks to buy and when to sell.
Income vs. Assets
Just growing your income is not enough. You MUST convert that income into assets. Two books I highly recommend you check out are The Richest Man in Babylon and Rich Dad, Poor Dad. I read these long ago, and have recently re-read them.
There are many people that have high incomes, but don’t save that money, and don’t transform it into assets that make them even more money. This is the true route to wealth. When your money can be used to create even more money, you’ll eventually get to a point where you don’t have to do anything. Your cash flow is greater then all your expenses and then you’re on easy street. But it starts with a foundation. If you haven’t created it yet, when are you going to start?
If you’ve been saying “I would like to invest my money” then now you should know two easy possibilities of where you can do it. If you’d like me to share more information on this subject in the future, or you have your own investment strategies you‘d like to share, comment below.