How Money Makes Money - YouTube

how money makes money you can't get wealthy  trading your time for money no matter how hard  

you work there are only so many hours in a day  and unfortunately you won't get paid for the time  

you take for rest sleep and other activities what  if there's an easier path to wealth what if your  

money could work for you what if it could be the  perfect employer it doesn't need sleep breaks or  

a salary so it is continuously hard at work making  more money for you round the clock all year long  

fortunately there are many ways your money can be  put to work making money for you and while you put  

in your 40 hours of work every week your diligent  dollars continue working non-stop so in today's  

video we will share with you six ways money makes  money but before we get into it give this video a  

big thumbs up and comment below what video or  topic you'd like us to make next now let's get  

into it high yield savings account a high yields  savings account can serve as a safe base for your  

army of dollars before deploying them towards more  profitable but riskier ventures high yield savings  

accounts are fdic insured and typically pay 20  to 25 times more than the traditional savings  

accounts so your money can generate more money  while it waits to be called and do other duties  

let's say you have an extra ten thousand dollars  and not sure yet of the best way to get it to make  

money for you keeping it in a high yield savings  account that offers an annual percentage yield  

apy of two percent will yield two hundred  dollars in a year while this is hardly a fortune  

it's better than leaving it in regular savings or  checking account that offers about 0.1 percent apy  

you might as well keep your cash under your pillow  as every financial planner will tell you it's  

a good idea to have a minimum of six months of  living expenses saved up in easily accessible cash  

as emergency funds before deploying the excess to  make more money for you your emergency funds are  

better kept in a high-yield savings account where  you can easily access them when the need arises  

you can easily open a high-yield  savings account where you already bank  

however online banks typically offer the highest  rate they keep their costs down by minimizing  

physical locations and can pass this cost  efficiency as higher rates for their customers  

before we get into the second strategy i'd like  to thank skillshare for sponsoring today's video  

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of skillshare premium membership and after that  it's only around ten dollars a month retirement  

accounts 401ks and iras are the two most important  retirement accounts these are investment accounts  

and your savings are invested in the market with  the promise of exponential growth a 401k is an  

employer-sponsored retirement account it's best  for people who don't have the self-discipline to  

set aside money by themselves since the cash is  taken straight from their paycheck with the 401k  

you invest pre-tax dollars this means that your  taxable income for that year is reduced to get  

the best out of your 401k start saving early  and as much as possible when you've set up your  

emergency funds the next target is to optimize the  tax efficiency of the 401k and get your money into  

the markets to start making more money for you if  your employer matches your contribution go for the  

maximum limit so that you don't leave any money  on the table after you've maxed out your 401k  

start putting your money in an ira independent  retirement arrangement or roth ira traditional ira  

and roth ira are retirement accounts that you open  and fund yourself the difference between the two  

is that with a traditional ira you contribute pre  or after tax dollars your money grows tax deferred  

and withdrawals are taxed as current income after  the age of 59 and a half but with a roth ira you  

contribute after tax dollars your money grows  tax-free and you can make tax and penalty-free  

withdrawals after the age of 59 and a half  the ira and 401k aren't the only retirement  

savings plans out there other lesser-known  options to consider include simple ira plans  

savings incentive match plans for employees  sep plans simplified employee pension payroll  

deduction iras profit sharing plans psps health  saving account hsa these funds in retirement  

savings are typically invested in mutual funds  cds etfs stocks bonds and other financial assets  

whichever retirement plan you choose to grow  your nest egg it makes sense to start early  

starting early allows you to leverage the power  of compound interest to reinvest and earn from  

your earning essentially a snowball effect that  exponentially grows your money so you start with  

a single investment of twenty thousand dollars on  your 20th birthday and it grows at a conservative  

five percent annually till you retire at 65. your  initial investment will compound to about 90 000  

stock market when you have set up maximum  permissible contribution to your retirement plans  

you should consider investing in the stock market  if you want your money to make money for you  

however avoid timing the market or day trading  that is trading stocks to take advantage of  

favorable fluctuations in the market you're better  off with a long-term investing strategy also known  

as buy and hold strategy this is a conservative  approach to investing where you buy security  

such as the stock mutual fund bond etf etc  and hold on to it for a long time this way  

the investment is not subject to short-term market  fluctuations as a long-term investor you'll hold  

on to your investments with the hope that in the  future the sector that you invested in will have  

grown substantially you ride out whatever new  development that arises over the period with  

the hope that in the next 10 years or more your  investment must have yielded a reasonable return  

with time the fluctuation should even out  resulting in an overall gain let's assume  

an average annual return of ten percent a ten  thousand dollar investment would yield twenty  

five thousand nine hundred and thirty seven  dollars after ten years even better if you add  

five thousand dollars yearly to your portfolio  your investment will grow to a whopping 105 624  

dollars in the same period suppose you don't have  time and skill to handle your portfolio personally  

in that case there are now robo advisors which can  automate your investment portfolio using advanced  

algorithms robo advisors like betterment and  wealthfront will create a bespoke portfolio based  

on your goals risk tolerance and other preferences  they'll give you a diversified portfolio made up  

of multiple funds to minimize your risks other  ways you can invest your money in the stock market  

and have it create more money for you include  index funds individual stocks target date funds  

and real estate investment funds reits real  estate housing is one of the basic human needs  

and the demand is always there therefore putting  your money in real estate is a great way to get  

it to create more money for you you can either  invest in residential or commercial real estate  

investing in real estate makes money for you  in two ways appreciation and rental income  

a property appreciates or increases in value  with time and you turn a profit by selling  

when investing in real estate bear in mind that  property appreciation is fast tracked by location  

improvements and development location is  the most critical appreciation factor for  

a residential property when facilities like  transit routes shopping malls schools and  

leisure facilities spring up around a neighborhood  the value appreciates considerably the second way  

you can make money from real estate is through  rental income your tenants pay a fixed amount  

monthly which is known as rent and this applies  to both residential and commercial properties  

let's take a look at some of the actionable  ways you can start earning from real estate  

flipping flipping is the process of buying a  property improving it within a short time and  

selling it off to make money from flipping  properties you must have an eye for viable  

properties you should be able to easily  determine the underlying cost involved in  

improving the property to the desired level and  its potential value you should also be able to  

fix them up yourself or hire a renovation firm buy  and hold here you buy a residential or commercial  

property and rent it out you can opt to manage  the property yourself or get a management agency  

to take the stress linked to being a landlord away  from you vacation rentals you can earn some money  

by renting out a house or room on a short-term  basis companies like airbnb have made it easy for  

homeowners and property investors to cash in on  this by catering to travelers this is especially  

profitable if your property is located in a  well-known tourist destination the demand for such  

arrangements is high as many vacationers prefer  it to staying in hotels real estate crowdfunding  

this method of putting your money in real estate  is especially suited for those who do not have  

much access to capital traditionally investing in  real estate requires a significant amount of money  

this has made the sole preserve of the rich and  those with access to financing but in recent  

times crowdfunding real estate deals have taken  off it involves the process of pooling resources  

together to invest in real estate the best part  you can start with as little as a hundred dollars  

there are many real estate crowdfunding platforms  where you can own a piece of high value property  

with a mere tap on your smartphone business you  can make a whole lot of money by starting your  

own business although not without risks putting  your money in a startup can pay off handsomely  

if you can't stomach the stress of getting a  business off the ground you can be a silent  

partner by putting down your money in someone's  venture you won't have control over the businesses  

daily running but if all goes well you will share  the company's profits without breaking a sweat  

self-improvement another way your money can work  for you is by increasing your value invest time  

and money in improving your marketable skills and  you will start reaping the rewards financially  

in no distant time look for certifications and  professional degrees that make you a high earner  

and highly sought after in your industry  and it doesn't even have to cost you a lot  

nor do you have to go to an ivy league university  and spend four years many online courses offer  

you an opportunity to further your education at a  reasonable cost and get certified in your interest  

areas so in conclusion your money can make money  for you if you know how to use it right the tips  

above can all be classified as passive income  sources that is making money without exerting much  

effort the best part about passive income is that  you continue to earn once you set it up even while  

you sleep sounds easy right still they all require  a significant upfront investment in time and money  

the list is not exhaustive and there are  many other passive income sources out there  

however the most important thing is that  you now know how money can make money  

just pick one and run with it thank you guys  so much for watching if you like the video give  

it a thumbs up and if you're new to the channel  welcome and consider subscribing for more awesome  

content like this with that said have a great  day you guys and i'll see you all in the next one