The answer for how to grow your money is more straightforward than you might think: save and start investing.
Some methods of making money are riskier than others, which means that there is a chance you could lose money if you try them.
Other methods might have a higher investment cost than others, meaning you might have to spend more money first before you get any money back.
So, how can you grow your money without taking on too much risk?
Let’s look at some of the smartest ways how to grow your money by saving and investing!
Here are our favorite investments and investment platforms where you can easily invest for $1,000 or less:
- Best Real Estate Investments – REITs with Fundrise
- Best For Beginners – Stock Market through Robinhood
- Best For Retirement Accounts – IRA account run by Betterment
How To Grow Your Money
To find out the best way for you to invest money, start by thinking about your financial goals and investment objectives.
Do you want to save for your kids’ college? Or maybe you want to save for a down payment or start your retirement savings?
Different investment accounts work better in the long term than others, whereas short-term investments can bring quicker passive income with a bit more risk.
A long-term plan may be right for you if you’re more concerned with stability than growth and saving money later in life.
With a long-term plan, you’ll typically invest money in lower-risk ventures to see slow and steady growth over time, usually five years or more.
The benefit of this approach is that even if your return on investment (ROI) isn’t as high as it could be, there’s a much lower chance of losing everything if things go south.
Use a FIRE calculator to see how long it would take to save enough money to quit your job and live off your investments.
If you’re looking to grow your money quickly, then a short-term plan is likely the way.
With a short-term plan, you’ll typically invest your money in higher-risk ventures in hopes of seeing a higher return on investment.
While there’s no guarantee that you’ll make money with a short-term plan, if things go well, you could get a significant return in your investment account, usually in five years or less.
Investing involves risk, no matter how you look at it. There are varying levels of risks and returns, so you could lose money but also make a lot of money. It all depends on your investment strategies.
Some of the long-term investments you could make to build wealth are:
1. Real Estate: REITs
Real estate investments are tangible assets that offer capital appreciation and income generation potential. But buying and managing property can be time-consuming and risky. Many investors choose to invest passively in real estate through REITs.
Real estate investment trusts, or REITs, are companies that own or finance income-producing real estate properties.
Fundrise is a REIT that allows everyday investors to pool their money and invest in large commercial or residential properties, such as malls, office buildings, apartments, or hotels.
Check out our Fundrise Review for a closer look at investing with Fundrise.
2. Stock Market
While there is always some risk involved in investing money in individual stocks on the stock market, if you choose the right stocks and stay on top of things, you can build wealth with good picks.
When investing in the stock market, spread your money around and invest in various stocks. Diversifying your portfolio like this will help you minimize investment risk if one or two of your stocks don’t perform well.
Another thing to remember is to be patient. Most investors will tell you don’t sell your stocks as soon as they start to go down. Most likely, they will come back up eventually.
Stay invested and ride out the bad times. Then, sell when things are going well again!
We recommend beginners start out on Robinhood, where you can invest in the stock market, ETFs, and even cryptocurrency.
3. Index Funds & ETFs
Index funds and ETFs can be suitable investments for long-term investors who don’t have enough money to invest in mutual funds.
Index funds are mutual funds that track an index, such as the S&P 500 or Dow Jones Industrial Average.
The goal of an index fund is to provide returns that match the performance of the underlying index. This differs from an actively managed mutual fund, where a professional manages the holdings to try and achieve better returns.
The lower costs and lack of volatility make these an excellent choice for long-term savings goals, especially when you can get higher returns with less risk by investing in indexing than actively managed funds that try beat their markets!
Exchange-traded funds (ETFs) are a type of investment fund that trades on stock exchanges, like regular stocks.
ETFs track an index, commodity, or basket of assets, much like mutual funds, but they can be traded throughout the day like stocks.
ETFs are a great way to invest in something that’s diversified. Just like mutual funds, they pool investor money and buy securities that guarantee them an exposure most people won’t be able to find anywhere else!
ETFs are available to any investor who doesn’t have the money to meet the minimum deposit requirements for a mutual fund.
4. Low-Cost Index Funds
Low-cost index funds are mutual funds that track a specific market index, like the S&P 500, and are considered lower-risk investments. They’re low-cost because they’re not actively managed, so there are no fees for a manager to buy and sell stocks.
And because they track an index, they’re automatically diversified, which means you’re less likely to experience significant losses in any particular stock.
Do the research and find one that fits your investment goals and risk tolerance. Then start investing today and watch your money grow!
5. S&P 500
The S&P 500 fund is a great way to add investing in the stock market to your investment portfolio.
The biggest companies from all over America make up this benchmark index, which has repeatedly been proven one of our most reliable metrics when looking at long-term success rates!
The S&P 500 index fund is a great place to invest money because it provides broad and diversified exposure.
Check with your financial advisor, but if you plan on staying invested for at least three years or more, this investment should suit your needs just fine!
The obvious drawback to this investment is that it’s not insured by the government, meaning you could lose money if values decline. However, indexes have traditionally performed well over time.
An IRA, or individual retirement account, is a great way to invest long-term to grow your money. This type of account offers many benefits, including tax breaks and the potential for growth over time.
When looking to open an IRA, it’s essential to consider the different types of accounts available. There are two basic types of IRAs: traditional and Roth.
With a traditional IRA, you can deduct your contributions from your taxable income, but you have to pay taxes on any withdrawals made in retirement.
With a Roth IRA, you don’t get a tax on your contributions, but you can withdraw them tax-free in retirement.
Contributing to your 401(k) is one of the smartest things you can do for your future. Many employers also offer matching contributions, which means free money for you!
One of the most significant benefits of a 401(k) compared to an IRA is that the money you contribute grows tax-free. Over time, this can add up to thousands of dollars in extra growth.
If you invest $100 per month into your 401(k), that money will grow faster than if it were in a regular savings account.
8. Vanguard Funds
Vanguard funds are some of the most popular mutual funds available. They offer investors many advantages, including low costs, tax efficiency, and broad diversification of their investment accounts.
Additionally, Vanguard funds are generally considered safe investment options because they are well-known and respected.
When choosing a Vanguard fund, it is essential to consider your individual goals and risk tolerance. Each fund has unique characteristics, so it is essential to find one that aligns with your investment strategy.
9. College Funds
It’s never too early to start making the best investments for your kids. Saving for your child’s college education is very important. The sooner you start, the more you will have when sending them off to school.
One of the best things about investing in a college fund or 529 Plan is that the money can grow over time, even if you only put in a few dollars a month.
That money is tax deductible and can be used for education expenses, including tuition, books, room and board, and other expenses.
To grow your money, you’ll want to invest in short-term investments. These investments typically have a maturity date of one year or less and offer relatively low risk and high liquidity.
10. High-Yield Savings Account (HYSA)
A high-yield savings account is an excellent way for people with low-risk tolerance to grow their money.
Keeping your money in a high-yield account can earn more interest on your deposits than you would in a regular savings account, which can help you grow your money faster over time.
There are several different high-yield savings accounts available, so be sure to shop around and find the best one for you.
Some accounts offer higher interest rates but require you to maintain a higher balance, while others have a lower interest rate but no minimum balance requirement. We use Chime as an HYSA, and right now, they offer 1.5% APY on your money, so check it out and see how much your savings will grow.
11. Treasury Bonds
Treasury Bonds are a low-risk investment option that conservative investors often use for asset allocation in their portfolios.
T-Bonds or T-Bills can help you grow your money over time. They are considered one of the safest investments available and offer a predictable, stable return.
Treasury Bonds are backed by the full faith and credit of the United States government, so you can be confident that your investment is secure.
When the interest rates rise, the prices of Treasury Bonds go down, and vice versa. So, if you’re looking for a safe investment that offers predictable returns with interest payments, then Treasury Bonds may be a good option for you.
12. Corporate Bonds
Companies issue corporate bonds to raise money and offer investors a fixed interest rate over a set time. Investing in them can be a great way to earn a consistent income, especially if you’re looking for a more secure investment.
Make sure you understand the bond’s terms and compare different offerings to find the best deal. You also want to be sure that the company issuing the bond is stable and has a good credit rating.
13. Certificates Of Deposit (CDs)
A relatively low-risk investment that offers a guaranteed return on your investment is certificates of deposit (CDs). Banks offer CDs, allowing you to invest a certain amount of money for a specific time.
In most cases, the longer you agree to keep your money invested in the CD, the higher the return on your investment will be.
If you’re looking to buy CDs, shopping around and comparing interest rates is essential. You can find great deals online; many online banks offer CDs.
14. Money Market
A money market account is a great way to grow your money. You can earn interest on your deposited funds with a money market account which means that your money will grow over time, allowing you to reach your financial goals sooner.
You can earn higher interest rates than a traditional savings account, but money market accounts typically have higher balance requirements than saving accounts.
You can use it to write checks, which is helpful if you need to make a large purchase or want access to your funds in an emergency.
Cryptocurrency is a digital or virtual currency that uses cryptography to secure transactions and control the creation of new units.
It is a decentralized currency, meaning it does not belong to any government or financial institution.
Many different cryptocurrencies are available, including Bitcoin, Ethereum, and Litecoin.
When buying cryptocurrency, it’s essential to use a reputable exchange. There are many of these exchanges available, so be sure to do your research to find the one that is right for you.
The most popular exchange is Coinbase.
16. Peer-To-Peer Lending
Peer-to-peer lending is a way to grow your money that has become increasingly popular in recent years. It works by connecting borrowers with investors who want to earn interest on their money.
Like most investments, you risk losing your investment if the person you lend to defaults on the loan. But like most riskier investments, you could get a better ROI on the cash you lend.
The average return on investment for peer-to-peer loans is around 5% per Kiplinger. This is much higher than the interest rate you get from most savings accounts, usually around 1% or 2%.
17. Cash Management Accounts
Cash management accounts meld the services of checking and savings accounts together into one account, which usually minimizes your account fees.
CMA usually offers a debit card and paper checks for checking and savings accounts with a higher interest rate. The account is also insured by FDIC insurance, just like regular checking and savings accounts.
According to Forbes, Betterment is one of the best cash management accounts you can have in your portfolio.
Here are a few more things to keep in mind when you’re looking for an investment platform:
- Decide what type of investor you want to be and what investment costs you can afford
- Look for investment platforms that offer free stocks when you sign up. For example, Robinhood offers free stocks when you open and fund an account.
- Determine what kinds of investments you want: Some platforms only allow you to invest in individual stocks and ETFs, while others offer options, mutual funds, and cryptocurrencies.
Each investment platform offers different advisory or brokerage services, so do your research before deciding where to invest your money.
For example, Stash allows you to start investing with as little as $5. On the other hand, Acorns rounds up your credit or debit card purchases to the nearest dollar and invests that spare change for you.
Be sure to read our Acorns Review to learn more about how to grow your money with Acorns!
Here are some other options for investing your money:
M1 Finance is a commission-free investment platform offering a more hands-off investment approach. With M1 Finance, you can choose from over 100 pre-made portfolios or build your custom portfolio.
Tips For Growing Your Wealth
It’s no secret that people want to learn how to grow their money. After all, who doesn’t want to have more money in their checking account?
While there is no guaranteed path to riches, there are certainly some things that you can do to help increase your chances of growing your wealth.
Know Your Risk Tolerance
Before you can start growing your money, you need to know your risk tolerance. That is, how much risk are you comfortable taking on? Your risk tolerance level will dictate your investments and how aggressive you are in pursuing growth.
For example, if you’re very risk-averse, you may only want to invest in low-risk, conservative investments like bonds and cash. On the other hand, if you’re willing to take on more risk, you may be more aggressive with your investments, opting for stocks or even cryptocurrency.
Pay Off Debts
One of the best things you can do for your financial health is to pay off any debts and start saving. It may seem like an obvious tip, but it’s often overlooked.
Paying off debt is important because it frees up money that can be used for other things, like investing or saving. It also lowers your monthly expenses, giving you more breathing room in your budget.
Start An Emergency Fund
Another important personal finance tip for growing your money is to start an emergency fund. An emergency fund is an account you only use in case of an unforeseen event, like a job loss or medical emergency.
Emergency funds are essential because they give you a cushion to fall back on if something unexpected happens. They can help you avoid going into debt or selling off investments at a loss.
Personal finance experts say that ideally, it would be best if you aimed to save 3-6 months’ worth of living expenses in your emergency fund. It may seem like a lot, but it’s essential to have a buffer in case something goes wrong.
Create Better Money Habits
We have learned that we have more money by creating better money habits. Changing our money habits meant learning how to budget, save, and invest our hard-earned money wisely.
Start by creating a budget and sticking to it. Track your spending for a month so you know where your money is going in your bank accounts. Then, look for ways to cut back on unnecessary spending.
Next, start saving your money. Set aside monthly money to reach your goals. Make sure to put your savings into a Chime high-yield savings account so you can grow your money faster.
Then once you have money in the bank, start investing to grow your money over time. Open a brokerage account and make the minimum purchase amount to trade individual stocks, mutual funds, or other investments.
Develop A Healthy Money Mindset
One of the most important things you can do for your financial goals is to develop a healthy money mindset. This means learning to be content with what you have and not stressing about money.
Creating a healthy money mindset is key to keeping your finances on track. If you can learn to be content with what you have and not worry about money, you’ll be in a much better financial position.
- Focus on abundance, not scarcity. Believe that there is enough money for everyone and that you can attract more wealth into your life.
- Think of money as a tool to help you achieve your goals, not as an end.
- Visualize yourself as a success story. See yourself achieving your financial goals and living the life you want.
- Be grateful for the money you already have. Appreciate all the good that it does in your life.
This article looked at several ways to grow your money – from investing in stock funds to buying savings bonds.
Investing in real estate with Fundrise is excellent for long-term wealth; putting money into the stock market using Robinhood is easiest for beginners- but your options are endless once you know more about investing.
By understanding the basics of each option and talking to financial advisors, you can make an informed decision about the best investments for you.
Stay the course and don’t panic during market downturns; over time, you should see healthy returns on your investment. Be patient and disciplined, and don’t let inexperience get in the way of your financial goals.
Consider talking to an investment advisor for advice on investing in stock funds and other investment vehicles.