Interview on HR.com
Most people can agree that they would welcome additional income. There are two ways to make more income – work more or have your money work for you. The smart option is to get your money working for you.
One of the most important things to consider when venturing into new territory is to ask, “what are my interests and skills?” And “how much time do I have?”These two things will dictate the direction you take when you are choosing an investment. The key is to choose something that you enjoy because when you enjoy what you are doing, creating income from it doesn’t seem like hard work. It feels like you are just having fun.
When you opt to make your money work for you, then the choices of investment are varied. Broadly speaking there are three categories – fixed interest, shares/stocks and real estate. Ask yourself, “which category will work best for me?” The category that will be the easiest for you to create income from will depend on your level of knowledge and the time you wish to devote to researching. The amount of money you have also influences where to start.
Fixed interest is the easiest, lowest risk and the least hands on. It also does not require a lot of capital to start up. Research your local market on where are the highest yielding interest rates. Look for alternatives to traditional banks such as finance companies or building societies. These vehicles will provide a secure investment with a higher interest rate than term deposits at the bank. Look for compounding interest rates as they provide a better return in the same time frame compared to straight interest. Compound interest means that your interest in paid into the investment and you earn interest on the interest. Your money is working extra hard for you this way. Investing in fixed interest requires little time after the initial research and your funds can be reinvested for as long as you desire.
Stocks, also known as shares, are perceived as a slightly riskier investment. A good place to start is by finding a stockbroker who provides information bulletins. Reading these will familarise you with your market and also provide recommendations of stocks to purchase. There are also many on-line sources of information about stocks depending on where you are in the world. They will often recommend “Blue chip” stocks which are established and profitable companies. These stocks are more expensive to purchase and often pay you a dividend. If you do not have a lot of money, “penny stocks” are one place you could start. These are new start-up companies which can be bought for cents in the dollar. You can buy and hold shares or trade them regularly. With all share/stock investments do your research and ask yourself if this is the right investment vehicle for you.
The last type of investment to look at is real estate. You can purchase a property or you can invest in mutual funds which are made up primarily of property investments. When you are seeking to purchase physical property you can consider residential or commercial property. The majority of investors begin with residential. A key point is to remember when looking at residential property is that you are not going to live at your rental property. You can therefore look outside of places you usually would. Perhaps a unit, or a side of town you would not consider living yourself. The prices of property are cheaper in less popular sides of town. Commercial property generally requires more capitsl than residential. The upside is that there are minimal expenses as your tenant pays for them.
The important thing with creating additional revenue streams is creating investment, which works for you and around you and your priorities. You aim is to have your money work for you with a minimal time outlay. If you enjoy creating your investments, not only will it be enjoyable, it will be easy. PE