4 Ways To Move Money Around for Passive Income
Making money can be a full-time grind, but it doesn’t have to be when you’re generating passive income. If you’re looking to boost your bank account without breaking a sweat, there are a variety of ways you can do so — from affiliate marketing on a personal website to investing in real estate.
Don’t wait around for a financial windfall. Instead, use the money you’ve already earned to increase your net worth. To start earning passive income, you’ll need to make some strategic money moves. Here are few easy ways you can put your money to better use building long-term wealth.
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Discover the Power of High-Yield Savings Accounts (HYSA)
If your cash is just sitting in a regular savings account, it’s time to introduce it to the high-yield variety that offers significantly higher interest rates and APYs compared to traditional accounts. This means your money grows faster without any extra effort on your part.
Putting your money into savings is a basic way to move your money, but without finding the best high-interest account to store it, you’re essentially leaving money on the table.
Keep an eye on those interest rates though — they can change. When they do, you might need to switch things up to stay on the profitable side as many banks run promotions for new customers where you can maximize the best rate by opening a new account.
Capitalize on Certificates of Deposit (CDs)
CDs are a type of deposit account where you lock away a portion of your cash for a fixed period, and in return, you get a higher interest rate than most savings accounts offer. The trick is to time these right, because you can’t access your funds until the account reaches maturity, or you could incur an early withdrawal penalty.
Here are a few additional tips:
Jump into a CD when HYSA rates dip: If the interest rates on your HYSA drop, shifting your funds into a CD with a better rate can boost your returns.
Roll over or move out at maturity: CDs come with a maturity date. When it arrives, you can either renew at a new rate, withdraw your cash or transfer it back into your HYSA, depending on which option is more lucrative at the time.
Have an optional escape plan: Opt for no-penalty CDs if you’re not 100% sure you can leave the money untouched until the CD matures. This way, you can pull out your funds without a financial slap on the wrist if something comes up.
Utilize Financial Windfalls
Whenever you stumble upon a windfall — be it from a profitable project or a bonus your company pays — consider a CD, stock, retirement account or other place you can put an upfront investment or deposit that can earn interest. If you know you won’t need to touch this money for a while, a CD can secure a higher interest rate for you.
A windfall is a great time to potentially invest in bigger things like buying property that you can flip or use for rental income or even to stock up on supplies for a new small business like an e-commerce store. Extra passive income is already money you don’t need to survive, so make sure you take advantage when you get a lump sum and put it toward your future.
Reinvest for New Opportunities
Passive income doesn’t just stop at interest or even within the limits of your risk tolerance. If you’re entrepreneurial, you might want to reinvest your money into other ventures like real estate investment trusts (REITs), stocks, bonds or new business projects.
Keeping some of your funds in no-penalty CDs or an HYSA gives you the flexibility to tap into that cash when exciting opportunities arise without losing out on the interest you could have earned.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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