Today’s article will sound a lot like bragging, but there’s actually a deeper lesson present. I’m going to show you how I invest $33,000 a year. And, how I do it on a modest middle-class income.
We’ll look at savings tips as well as some practical investment advice. I’ll also show you how living within your means, developing a side income, and consistent action can build wealth at an incredible level.
If you’re interested in personal finance, this is one article you don’t want to miss.
1. Where You Live Affects What You Earn
Living in a really expensive place (like New York or London) is great, if you’re making lots of money. For middle-class people, you’ll often do better by moving somewhere less expensive
I recently saw a terrific article about someone who moved to Cedar Rapids, Iowa and saved a fortune.
Likewise, I personally live in an area that’s way cheaper than my annual income.
Doing so saves a ton of money, allowing me to invest the difference. On top of this, low-cost areas can still be a lot of fun. You can still eat out, make friends, and do a bunch of fun stuff.
2. Understand The Power Of Compounding
The early you start saving, the more money you earn. This is the power of compound interest, and it’s what Albert Einstein described as “the eighth wonder of the world.”
If you invest $100 a month, starting at age 18, you’ll end up with over $1 million by retirement.
Little decisions add up and even if you can’t save much, setting aside some money is still important. Try to invest at least $100 – $200 a month while you’re young, and watch that money grow.
3. Invest In A Side-Business
(My Best Investment? Side-Income!)
Having a second stream of income that goes 100% towards investments is great. In fact, it’s a terrific way to quickly build up your assets and start amassing bigger and bigger dividend payouts.
Best of all, the return on investment is insane.
You can start your own business for a few hundred bucks and make tens of thousands of dollars off it. My websites yield better returns than any crypto or stock investment.
If you haven’t already, I suggest starting your own side-business. This could be a website (BlueHost is a terrific web platform), a service (like tutoring), or anything else you can possibly imagine (for some inspiration read The Millionaire Fastlane).
4. Education Is The Best Investment
I invest a lot of time and money into my education. Reading books, taking classes, and watching YouTube tutorials are all part of my regular routine.
You should do the same.
Why?
Because the more you learn, the more you earn. An old cliche, but true. Read some personal finance books, or some titles on investing, take a college course (these ones from EDX are all free), and subscribe to some how-to YouTubers.
Thanks to free and low-cost resources, you can easily develop skills which can double or triple your investable income (either through saving or making more money) and greatly improve your life.
Education doesn’t stop when you graduate school, so make sure to continue learning.
5. Balance Risk And Reward
Investing is all about making your money work for you. Losing all your savings on penny stocks or day trading actually worse than spending it all at a casino or luxury shopping mall. At least you’d get free drinks or a cool sweatshirt in those situations.
Because of this, I like playing it safe with 80% of my money.
This means buying dividend paying index funds (like VYM or SPHD), bonds, the S&P 500, and a few blue chip staple companies.
That said, I also use a portion (keyword there) of my money to swing for the fences. I’ve swing traded BitCoin (as well as HODLing), bought alt coins (some did well, others didn’t), and placed a few high-stakes casino wagers.
While some of these investments flopped, others did quite well and I’m up in the double digit returns overall.
That said, for casual investors and busy people, I’d recommend playing it safe. Use Robinhood to dollar cost average into trusted index funds. Or join CoinBits to slowly build up your crypto holdings.
Doing so allows you to take advantage of compound interest and create lasting wealth.
Closing Thoughts On Investing $33,000 A Year
Being able to invest a lot of money each year takes time. Unless you’re a millionaire, it’s highly unlikely that you can just plunk down tens of thousands of dollars on a whim.
Because of this, you need to harness the power of compound effort. Little actions add up, and what you do today has a massive impact on your future.
Start by making small steps, like reading about personal finance. Then work on building your side-income. And also make consistent monthly investments into safe, reliable assets through a service like Robinhood or Coinbits.
These small actions might not seem like much at first, but they’ll snowball into something bigger as you continue your efforts.
P.S. One reason I also suggest joining Robinhood or Coinbits is because both services give you a free welcome investment when you sign-up through any referral link on this site. In other words, you’re getting extra funds at no cost.
