6 Tips To Make More Money From Your Savings
There’s a part on “Rich Dad Poor Dad” that states ‘Savers Are Losers’, which really makes a lot of sense.
World famous Robert Kiyosaki outlined on his book the reasons why you are losing more if you save due to several factors like inflation, opportunity to make your money grow etc.
However, this doesn’t mean that you should not save.
Saving for “rainy day” seasons, for future purchases, for managing debts etc are great reasons for you to save.
However, if you are one of the many people (like me) who wish you could get a little more out of your current savings account, there are ways to make more money with the money you put into savings if you take the time to find a better deal.
With current interest rates so low, you are lucky to even get one or two percent on your savings with a traditional passbook savings account.
I remembered my $1000 savings earned me $16 in 9 months.
I previously worked with one of the biggest banks in the US.
From my experience, I can tell you that there really are variety of products you can take advantage to yield more money.
So before deciding to put all your money on a normal savings account, read this post first to give you something to ponder on.
While stocks often put your money at risk, especially with today’s fickle stock market, and investments into things like real estate is no longer a sure thing, just making some shifts with your savings could yield you more cash.
I have outlined below 6 of the best tips you can get to make more money from your savings.
Some people will make more money by investing some of their savings into bonds.
There are many municipal bonds that are really safe, and United States Treasury Bonds, which are also quite conservative as well but will usually often bring you in more money than current savings accounts.
These investments are good long-term investments and are as safe as virtually any other investment.
Once you have stacked up a little more money, you could put your money into certificates of deposit with your bank.
These certificates offer a little more interest than your savings account, and the longer you are willing to tie up your money in one, the better interest rate you will get.
Six months is the shortest time frame for a certificate of deposit, and some go as long as five to ten years.
You can make more money if you use the longer-range certificates as long as you do not need the money withdrawn, which you will pay a penalty for if you have to break the certificate before it is due.
If you get to a point where you have large sums of money in your savings, you can turn that account into a money market account and make more money than before as well.
Money Market accounts are basically a savings account with restrictions on how often you can withdraw funds or write checks from it.
You may also be held to maintaining a minimum balance on the account or be hit by fees if you fail to do so.
All in all, you can make more money through very safe means if you are willing to take a look at what your bank has to offer.
Many times, even changing to a different bank could bring you more cash through more favorable interest rates too.
Even if it seems like the differences are merely equating to a few cents at a time, those pennies will add up over the years and you will be happy you made the switch.
2. Online bank
You can get a higher interest rate if you agree to invest your money in an online bank.
This is because companies reduce the operating costs of the industry and make part of your saving possible in the form of higher interest rates.
We know that many will have reservations about how to put their hard-earned money in deposit banks in online banks. But if you choose this route, you will be rewarded.
Here are some of the most reputable online banks:
Online banks have much lower indirect costs than banks with physical branches.
With this benefit, they usually offer higher interest rates in the money market accounts.
Just make sure the online bank is insured by the FDIC and be sure to do a Google search before opening an account with them.
3. High Interest
You can make your savings grow much faster over time by placing your money into a high interest savings account.
A high interest savings account generally yields an interest rate greater than 2.5%.
Most of the high interest products offering the most competitive interest rates are online savings accounts.
Be mindful though that most banks have higher minimum deposit requirement for high interest savings accounts.
4. The Passive Income
The passive income that you receive from your high interest account can help you achieve financial security and build your nest egg without requiring you to work overtime or take a second job.
Earning passive income from your savings is a good way to negate inflation.
The rate of inflation is based upon the average increase in prices which therefore causes the real value of the dollar to fall.
Therefore, if your money is tied into a high interest account that returns at least 4% interest a year, you have to subtract this rate of inflation in order to understand exactly how much your money is actually growing.
5. HYIPS (High Yield Investment Program)
Indeed, if you want safety you would normally turn to a bank, but then you would receive a 3% yield for your money.
On the other hand, if you want a very high yield, you could turn to a HYIP and get returns as high as 120% per month on your savings
P.S: This method is a high risk-high return type. Make sure that before embarking on this type of program, only use the money you can afford to lose.
6. Use Your Emergency Savings Wisely
Solid Personal Finance Principles dictate that maintaining a 6-month savings reserve is essential for financial stability.
This gives a bit of protection against work interruption, house construction or something unexpected.
This money should not be invested, but you should try to earn interest on this money.
What I can recommend is for you to consider Peer to Peer lending marketplaces. See Prosper to know more of how it works.
In conclusion, there’s nothing wrong with saving money for future events. In fact, it has a lot of benefits especially the peace of mind it provides.
However, I wrote this article with the intention of providing some ways on how you can maximize the use of your money by putting it on other vehicles which can generate better returns than having it sleep on a regular savings account.
Have you tried any of the above mentioned alternatives to savings account? Share us your thoughts by leaving a comment below.