Most people make money the same way. They get a job and earn a wage. This can work fantastically, especially if you have a good career and plenty of prospects. However, it isn’t the only way to earn money and improve your finances.
One way to earn more money is through passive income, specifically by investing your money into an asset and either collecting regular dividends or selling the asset on once it appreciates in value.
Investing and Saving
The key to investing is to only use money that you can afford to lose. This is because every investment carries a measure of risk. Even if you do anything right, time and unforeseen occurrences can topple any plans. For example, the Covid-19 pandemic caught many people off-guard, as did the ongoing war in Ukraine.
The difference between investing your money and saving your money is a significant one, and most households should aim to do both. When you save your money, you put it away in a bank account where it slowly appreciates in value, depending on the interest rate. Your money is relatively safe where it is, but it doesn’t increase by much. In some cases, the interest rate is lower than the rise in the cost of living, meaning that you end up being able to do less with what you’ve saved.
However, when you invest your money, you are doing something more active with it. The money gets used to purchase assets, as it would be used to purchase anything else. This means that, while you have the asset, you don’t have the liquid funds. Some investments are short-term and risky, but they offer a high potential return.
Depending on the investment, you can gain a regular passive income. For example, owning shares in a company allows you to collect a small amount of the profits, earning a regular income without doing much. Real estate is another way to do this, as you can collect on rent until you sell the property.
Expert Advice and Research
Investing your money isn’t the same as gambling it, and you should never have the same attitude as you would in the casino. Otherwise, your investments will all likely end up coming to nothing, and people have lost huge amounts of money this way.
When putting your money into anything, do your research and make sure that it is legitimate and likely to provide a return. This reduces the inherent risk of investing and improves the chances of making money.
Following the advice of experts like Eric Pulier can also help you determine where best to invest and put your money for more profit.
This is a contributed post.