I don’t believe growing your wealth is a passive endeavor. It requires commitment and focus if you want to do it during the part of your life where you can actually enjoy it. And I definitely don’t think it is something you should outsource and hope that someone will do for you.
Yesterday I was asked by a friend of mine what are some other alternatives to investing money in Wall Street (Stock Market). I am real estate guy all the way, so obviously that is my immediate response. However, I realize a lot of people don’t want to invest in real estate. At least not as an active investor.
I decided to compile a list of other places a person can invest money and get a return to help them build wealth.
I have not used all the ways I am suggesting here. However, with some research and due diligence in each one, a person can decide for themselves if it makes sense for them to use one of these strategies.
1.Start a Business
One of the best ways to create wealth is to start your own business. That is just the facts. If you can find a product or service that people are willing to pay you for. And then you can scale it to reach a lot of people. It is the #1 way to build and create wealth.
2. Ownership in another persons company
I know I mention investing in someone else’s company as a way to build wealth. But let’s say you don’t have the money to do this. Then the next best thing is finding a company that will give you some ownership. You typically see this in start up companies or if you have a unique skill set that can help a company grow you could also negotiate some form of ownership.
This one is a bit difficult for me to type and say. But it is a way to build wealth. Now I know many people will disagree with it, and on the surface I disagree with it as a strategy. But if you are a high income earner. And you keep your expenses low. You can save a lot of money. And even if you aren’t getting a great return on your money. You could save a lot of money and be financially independent one day.
4. Buy and Hold real estate:
Buy and hold real estate is a long-term investment strategy in which an investor purchases a property with the intention of holding onto it for an extended period of time, typically years or even decades, as opposed to flipping it quickly for a profit.
The investor will typically rent out the property to tenants, generating cash flow from rental income, while also benefiting from potential appreciation in the property’s value over time.
Buy and hold real estate investors often look for properties in areas with high demand and growth potential, and they may also make improvements to the property to increase its value and appeal to potential renters.
This strategy requires patience and a long-term perspective, as it may take time to realize a significant return on investment. However, it can also provide a steady stream of passive income and potential long-term wealth accumulation through the appreciation of the property’s value.
5. Real Estate Syndication:
Real Estate Syndication is ideal for people who don’t want to be in the day to day of real estate investing. This gives the person an opportunity to get all of the benefit of real estate investing without the hassle. The key is to pick the right person who operates the deal. The syndicator.
Real estate syndication is a process of pooling capital from multiple investors to purchase and manage real estate assets. The investors combine their resources to buy larger properties, such as apartment complexes, commercial buildings, or shopping centers, that they would not be able to acquire on their own.
The syndicate is usually managed by a lead investor or a professional syndicator, who is responsible for identifying the investment opportunity, structuring the deal, and managing the property. The syndicator earns a fee for their services, and the investors receive a portion of the rental income and profits from the sale of the property.
6. REITS (Real Estate Investment Trusts)
When it comes to REITS it is a little different than a syndication. You are much closer to the deal and the individuals involved in the deal with a syndication. Where REITS are closer to a typical relationship a person might have with a stock broker or financial planner. However, you do get to decide in what kind of properties your money is invested in.
A Real Estate Investment Trust (REIT) is a type of investment vehicle that pools together capital from many investors to invest in real estate properties or real estate-related assets. REITs are typically traded on major stock exchanges, making them a relatively easy and accessible way for individuals to invest in real estate without having to own, manage, or finance property directly.
REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends. This means that they can offer attractive dividend yields, making them an attractive investment option for income-seeking investors.
REITs can invest in a wide range of properties and assets, including apartment buildings, office buildings, retail centers, warehouses, hotels, and other types of real estate. There are also different types of REITs, such as equity REITs that invest in physical properties, mortgage REITs that invest in mortgages and other real estate debt securities, and hybrid REITs that invest in both properties and mortgages.
Investing in REITs can offer investors exposure to the real estate market with relatively low minimum investment amounts and liquidity. However, like any investment, REITs come with their own set of risks and investors should carefully consider their investment goals, risk tolerance, and investment horizon before investing in REITs.
7. Peer-to-peer lending:
Peer-to-peer lending platforms allow investors to lend money to individuals or businesses in exchange for interest payments. The ROI can range from 5-10% annually, depending on the platform and the risk level of the borrowers.
8. Private equity
Private equity investments involve buying and selling companies that are not publicly traded. The ROI can vary widely, but some investors aim for annual returns of 15-20%.
9. Angel investing
Angel investors provide funding to startups in exchange for equity in the company. The ROI can range from 20-30% annually, but the risks are high due to the high failure rate of startups.
Investing in commodities like gold, oil, or agriculture products can provide a hedge against inflation and market volatility. ROI can vary widely, but some investors aim for annual returns of 5-10%.
11. Savings Bonds
If you’re looking for investments that pay stable interest rates. Savings bonds are offered by the federal government and pay interest over a specified period of time. They’re very low risk because they’re paid by the government, so the only way you could lose your money is if the government defaulted on its debts. You can buy either Series EE bonds, which pay a fixed interest rate, or Series I bonds, which have a portion of the interest rate based on the inflation rate.
12. Certificates of Deposit
Certificates of deposit are bank accounts that offer a fixed rate of interest for a specific period of time and are protected by the Federal Deposit Insurance Corporation. But in the event you take out your money before the term ends, you will usually pay an early withdrawal penalty. The interest rates typically won’t match long-term returns in the stock market, but they’re guaranteed by the full faith and credit of the U.S. government not to lose value.
13. Municipal Bond
A municipal bond, often called a “muni bond,” is a debt security issued by a state or local government, such as a city, county, or school district. Municipal bonds are used to finance various public works projects, such as the construction of schools, hospitals, highways, and bridges.
Investing in municipal bonds can be appealing to investors seeking a tax-advantaged source of income. Interest earned on municipal bonds is typically exempt from federal income tax and may also be exempt from state and local taxes if the investor resides in the same state as the issuing municipality.
Municipal bonds are generally considered to be a relatively safe investment, as municipalities have the power to levy taxes to repay their debts. However, like any investment, municipal bonds do carry risks, including credit risk (the risk that the issuer will default on the bond) and interest rate risk (the risk that interest rates will rise, reducing the value of the bond).
Municipal bonds can be purchased through a broker or financial advisor, or through a mutual fund or exchange-traded fund (ETF) that invests in municipal bonds. It’s important to carefully consider the creditworthiness of the issuer and to consult with a financial advisor before making any investment decisions.
14. High Yield Savings accounts
A high yield savings account is a type of savings account that typically offers a higher interest rate than a traditional savings account. High yield savings accounts are offered by online banks, credit unions, and some traditional banks.
The interest rate on a high yield savings account can vary widely depending on the financial institution and the current market conditions, but it is typically higher than the rate offered by traditional savings accounts. The higher interest rate can provide a higher return on savings and can be particularly attractive for individuals who are looking for a low-risk, liquid investment option.
High yield savings accounts typically come with fewer restrictions than other investment options, such as certificates of deposit (CDs), which may require a minimum deposit and a fixed term. With a high yield savings account, the account holder can typically make deposits and withdrawals as needed without penalty.
15. Series 1 Bond
A Series 1 Bond is a type of savings bond issued by the United States government. It was first introduced in 1998 as a replacement for the Series E and EE savings bonds, and it is still being issued today.
Series 1 Bonds are designed to be a low-risk investment option that offers a guaranteed rate of return. The bonds are purchased at face value and earn interest based on a combination of a fixed interest rate and a variable rate that is adjusted twice a year based on the current inflation rate.
The fixed interest rate on a Series 1 Bond is determined at the time of purchase and remains the same throughout the life of the bond, which is 30 years. The variable rate is based on the Consumer Price Index for Urban Consumers (CPI-U) and is adjusted every six months.
Series 1 Bonds can be purchased online through the TreasuryDirect website or through a financial institution that participates in the bond program. They are available in denominations ranging from $25 to $10,000, and there is a limit on the amount that can be purchased in a calendar year.
Series 1 Bonds can provide a safe and relatively low-risk investment option for individuals seeking to diversify their portfolio or save for long-term goals. However, they may not offer as high a return as other investment options, such as stocks or mutual funds, and they can be subject to inflation risk. It’s important to carefully consider the terms and conditions of the bond and consult with a financial advisor before making any investment decisions.
I include sales into the list because it is one of the professions that you can get into where your ceiling for income is as high as you want it to be. Sales is the only profession where the company shares the income with you the more successful you are. Many people and I would include myself in this cartegory early in my career, worry about what is the floor on my income potential when you take on a new job. Meaning what is the amount of money I am guaranteed to get paid. I would encourage you to get into a position that has little to no floor, but the ceiling is as high as you want it to be. And if you are successful in this kind of position, you can become wealthy.
As I said at the beginning. If you want to build wealth it is going to require a commitment and focus on it. I have been focused on it for most of my life and I am just now getting to a point where I feel like I am having some great success. You can’t outsource this to someone else. If you want to get wealthy and enjoy your money while you’re still physically capable. Then you have to make an effort to go all in on it.
To your success and your future.
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