Did you know that money really does grow on trees? Well, maybe not literally, but there are ways in which money can come to you virtually free. Now many of these free money methods aren’t as popular or maybe as profitable right now in the midst of the Great Recession as they once were, but that doesn’t mean they still aren’t beneficial and won’t become more so in the future.
It’s not that I’m advocating anything unique or some risky investment option that could make you a millionaire overnight. Rather, I’m pushing some of the simplest, yet most effective ways to grow your money safely and securely. These methods may ensure a return, even if it’s just a modest one, rather than promising an 8-10% average return as the stock market seems to tout, even as we watch our retirement portfolios dwindle.
Savings & CDs
I know, I know, you’re probably saying to yourself, “What’s this guy thinking? I can’t make squat putting my money in a savings account or certificate of deposit?”
My answer to that is, you may not make much right now, but it’s better than losing money, and making a little free money, even if it isn’t much, is still better than nothing at all. I think we’ve all become spoiled by the expectations of Wall Street. Our financial advisor’s expectations of 10% yearly returns are now our shared by us as well. It seems the attitude abounds that if an investment isn’t going to generate huge returns immediately, it isn’t worth considering. This outlook has jaded us in our ability to appreciate getting anything in return for investing our money safely and wisely.
Putting money in an FDIC insured bank account or CD is pretty much the same as someone telling you, I’ll pay you (even if it’s just $20 a year) to guarantee the safety of your money. I don’t know about you, but that sounds like a decent deal to me! Granted, it won’t grow my money exponentially, but I won’t lose it exponentially either.
Here’s another one you might scoff at when first mentioned, however; I beg you to hear me out. Savings bonds (my personal favorite are government issue Series-I) can be a great way to keep your money out of temptation’s way, keep it safe, as well as magically transform it into extra dollars years from now. As long as you don’t need your money anytime soon, you can plant the money tree seed in savings bonds so that down the road, that seed will have transformed into a money producing tree (figuratively speaking of course).
The great part about Series-I government savings bonds is that they attempt to keep pace with inflation, typically basing their interest payments upon a formula (available at www.treasurydirect.gov) revolving around the CPI-U rate of inflation and a rate fixed to the bond determined by a particular bond’s issue date. Savings bonds can typically be purchased at your local bank, and you can ask questions about them there or learn much more about government savings bonds, how they work, and their rates by visiting the US Treasury’s site online at www.treasurydirect.gov.
I’m not a big fan of just walking away from debt. Whether it is related to a home mortgage, credit cards, student loans or whatever, when you assume debt, you assume a responsibility, and any adult should understand the consequences of that responsibility. This isn’t to say that factors in our live that are beyond our control can push us into situations that allow our debt to overtake us. However, I feel the general public has undertaken the stance that if they find themselves in a sticky situation when it comes to their bills, it’s best just to walk away, leaving someone else to deal with the problem. Now I’m not absolving shady lenders and greedy credit card companies from their role in getting people in over their heads, however; the overall responsibility lies with the person or people who have assumed the loan.
That being said, paying down debt and reducing interest rates and fees can be a great way to see money begin to manifest itself within your coffers. Sure, it’s your money to begin with, but rather than giving it to those creditors by way of interest payments, you’ll be keeping it for yourself. Rather than sticking extra money in a savings account, certificate of deposit, or investing it in bonds, you might instead consider paying off debt. Technically, you won’t be earning money, but in a way you’ll be saving money by reducing the overall amount you must pay in the long run on your credit. For example, putting $1000 toward your credit card debt at 15% or a mortgage at 5.25% can save you more money over the life of that loan, that it would earn you by putting it in a savings account or certificate of deposit at only 1.25% for the same timeframe.
The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.