Invest Wisely: Make A Living Wage From Your Investments

Making a living wage from investments is a challenging but achievable goal. While it requires dedication and perseverance, there are various ways to generate income and build wealth over time. One approach is to invest in the stock market, taking advantage of compound interest over several decades. This strategy, however, demands a long-term commitment and the ability to withstand market fluctuations. Another option is to generate multiple streams of income through side gigs and freelance work, such as online tasks, delivery services, or renting out assets. Additionally, individuals can leverage their skills and expertise by becoming tutors, influencers, or consultants. It is also important to manage costs effectively and take advantage of tax benefits, such as retirement plans and credits for low-income earners. While building a living wage from investments is a journey, it can lead to financial security and independence.

Other ways to make a living wage

• Freelance work
• Website and app testing
• AI tools
• Online surveys
• Affiliate marketing
• Sell crafts on Etsy
• Self-publish an e-book
• Advertising revenue from a blog or YouTube channel
• Instagram influencer
• Monetize a Twitch channel
• Sell photography
• Dog walking
• Sell unused gift cards
• Rent out a room on Airbnb
• Sell used clothes
• Trade in old phones and electronics for cash
• Babysitting
• Rent out your car
• TaskRabbit
• Private tutor
• Drive for Uber or Lyft
• Make deliveries for Amazon, Uber Eats, etc.
• Housesitting
• Mystery shopping
• Drone photography

Invest in stocks and shares

Investing in stocks and shares is a long-term game. Very few people make money overnight, and it requires a lot of research, knowledge, and patience.

Firstly, you need to open an investment account. This is where your investments will live, and you can choose from a few different types of accounts, such as a 401(k), Roth IRA, or traditional brokerage account.

Then, you need to decide whether to invest in individual stocks or stock funds. Funds are made up of dozens or hundreds of stocks that mirror a market index, like the S&P 500. This option requires less knowledge about individual companies and helps decrease risk. With individual stocks, you need to do your research and be prepared to take on more risk.

The key to making money in stocks is to stay invested for the long term. This is known as the "buy and hold" strategy. The stock market's average return is 10% annually, but many investors fail to earn this simply because they don't stay invested long enough. The more time you're invested in the market, the more opportunity there is for your investments to grow.

Another way to make money in stocks is to invest in dividend-paying stocks. Dividends are payouts made by companies to their shareholders, usually on a quarterly basis. By staying invested in the market for longer, you'll be able to collect these dividends.

Finally, explore new industries. Some industries, like AI, are booming, and it can be exciting to get involved in these blossoming sectors. However, it's important to do your research and be aware of the risks involved.

Overall, making a living wage from stocks and shares is possible, but it requires discipline, education, and a long-term focus.

Invest in your own business

Investing in your own business is a great way to make a living wage from investments. Here are some detailed instructions on how to go about it:

Understand your business finances

Before investing in your business, it's crucial to grasp the basics of your business finances. This includes knowing how much you can reasonably invest, creating a high-level forecast for the year, and having a basic understanding of your cash flow. This means delving into areas that might typically be handled by an accountant, but as the business owner, you are ultimately responsible for making sound financial decisions.

Determine your funding sources

Funding your business is one of the most critical financial choices you'll make. Common funding options include self-funding or bootstrapping, which involves using your personal financial resources, or turning to friends and family for capital. You can also seek venture capital from investors, which typically entails giving up some ownership and control of your company. Crowdfunding is another option, where you raise funds from a large number of people without giving up ownership. Small business loans, grants, and angel investors are also potential sources of funding.

Understand your personal finances

Your personal financial situation will also play a role in how you invest in your business. If your business is your main source of income, you'll need to carefully consider how much you pay yourself and how much you reinvest in the business. If you have other sources of income, you may have more flexibility to take a lower salary and reinvest more in the business.

Set a reasonable salary for yourself

As both the salary-giver and salary-receiver, deciding on your compensation will impact how much money is left to reinvest. Understanding your personal financial needs will help you allocate funds appropriately.

Understand your goals

Before investing, it's important to have clear goals and a plan for how the investment will benefit your business. Identify the hypothesis or rationale behind the investment and the key metrics you'll track to evaluate its success.

Reevaluate regularly

When making investment decisions, set goals and timelines for reevaluating your choices. This will help you stay on track and make any necessary adjustments.

Remember, investing in your own business requires a thorough understanding of your finances, both personal and business-related, as well as a clear vision for how the investment will support your goals.

Invest in real estate

One way to make a living wage from investments is to invest in real estate. Real estate investors rely on income from rents for residential and commercial properties, and property value increases are a common way to make money. Appreciation, or an increase in a property's value, is influenced by location, development, and improvements. For residential properties, location is often the biggest factor in appreciation. As the neighbourhood around a home evolves, adding transit routes, schools, shopping centres, playgrounds, and more, the home's value increases. Home improvements, such as adding an extra bathroom or remodelling a kitchen, may also increase the home's value.

There are several ways to invest in real estate. One strategy is buy and hold, where investors buy a single-family home and rent it out, or buy a multifamily home and live in one unit while renting out the others to cover the mortgage. Another strategy is flipping, where investors add high-return fixes to houses in a short time and then sell them. Vacation rentals are another option, where homeowners can rent out a house or a room on a short-term basis, especially in tourist destinations.

Real estate investment trusts (REITs), mortgage-backed securities (MBSs), mortgage investment corporations (MICs), and real estate investment groups (REIGs) are also investment alternatives within the real estate sector. REITs allow investors to buy shares of a fund of multiple commercial properties, with rental income shared as a distribution. MICs and MBSs invest in private mortgages, while REIGs offer investors equity investments or partnership servicing.

It's important to note that real estate investment is not a sure bet, as the market has boom and bust cycles. However, with the right strategies and considerations, it can be a profitable venture.

Invest in cryptocurrency

Cryptocurrency has become an increasingly popular way to make money, with the rise of Bitcoin, Ethereum, and other cryptocurrencies. There are several ways to make money through cryptocurrency investments, and it is important to do your research and understand the risks involved. Here are some strategies to consider:

Mining

Mining is the process of verifying transactions on the blockchain and adding new blocks of data to the chain. Miners are rewarded with cryptocurrency for their efforts. Mining can be done through specialised hardware or cloud mining services. It is important to note that mining requires a lot of electricity and can be challenging, so thorough research is necessary before getting started.

Staking

Crypto staking involves holding a certain amount of coins in your wallet for a specific period. By doing this, you earn interest on your investment, allowing you to generate passive income. The interest rate depends on the cryptocurrency and the number of coins staked, so research is crucial to finding the best options.

Trading

Trading cryptocurrency involves buying and selling on a crypto exchange to take advantage of price fluctuations. This method can be risky, so it is important to understand the basics before starting to trade.

Investing

You can invest in individual coins such as Bitcoin and Ethereum, or a cryptocurrency index fund to diversify your portfolio and spread your risk. It is important to research and understand the risks involved with any investment.

Lending

Cryptocurrency lending involves lending your cryptocurrency to someone else in exchange for interest. The interest rate depends on the type and amount of cryptocurrency lent.

Yield Farming

Yield farming, or liquidity mining, involves lending your cryptocurrency to a platform in exchange for interest. Many platforms offer yield farming opportunities, but not all are safe or reliable, so it is important to choose trustworthy ones.

Affiliate Programs

Some cryptocurrency exchanges offer affiliate programs where you can earn commissions by referring new customers. This can be a competitive space, so it is important to research and find the most profitable programs.

Initial Coin Offerings (ICOs)

ICOs are a type of investment where you buy a company's token in exchange for cryptocurrency. ICOs can offer high returns but come with a high risk of scams and losses, so thorough research is essential.

Security and Research

When investing in cryptocurrency, it is crucial to take security precautions such as strong passwords and two-factor authentication. Additionally, the market can be extremely volatile, so it is important to stay informed about market conditions and trends. Diversifying your investments across different cryptocurrencies can help minimise risk.

Invest in fine art

Fine art can be a valuable investment and a way to make a living wage. Art is an alternative asset class that falls outside traditional classes such as stocks, bonds, and cash. It can strengthen and diversify traditional portfolios by seeking returns independent of equity and bond markets.

Art has been a valued alternative asset for a long time, both emotionally and financially. Since early 2021, art investment has become even more attractive as a viable asset class due to the unstable economic climate. The global art market grew by 29% between 2020 and 2021, with sales of art and antiques by dealers and auction houses reaching an estimated $65.1 billion.

Understand the Art Market and Different Ways to Invest:

The art market has two main segments: the primary market, where art is sold directly by artists or through representative galleries, and the secondary market, which involves reselling previously owned art.

You can invest in traditional ways, such as buying art on the primary or secondary market through auction houses, dealers, brokerages, or galleries. Alternatively, you can explore newer initiatives like art investment funds, fractional shares, or even digital art and NFTs.

Set Clear Goals and Conduct Research:

Determine what you want to achieve with your investment. Are you solely focused on financial returns, or do you also have a personal interest in collecting art? Understanding your goals will guide your investment strategy.

Conduct thorough research to identify the type of art that aligns with your goals and interests. The art world is vast, ranging from Renaissance etchings to contemporary digital installations. Seek expert advice from art professionals, such as dealers, gallery owners, or private collectors, who specialize in the type of artwork you want to acquire.

Consider Your Budget and Risk Tolerance:

Investing in art can be accessible to various budgets. Assess your financial situation and determine how much you are willing to invest. Remember that art is a non-liquid asset, so consider your risk tolerance and the potential illiquidity of the investment.

Make Informed Decisions:

When evaluating a piece of art for investment, consider several factors. Firstly, assess if the artwork is investment-grade by checking the historical sales and return on investment of the artist. Secondly, ensure that the artwork resonates with you and brings you joy, as art is a risky investment, and you should derive some personal value from it.

Seek Expert Advice and Appraisal:

Consult experts, such as art advisors or consultants, to guide you in making informed decisions. They can provide insights into the potential investment value of a piece over time and assist with shipping and installation.

Explore Different Sources for Acquiring Art:

For contemporary artworks, you can explore platforms like Artsy. For more historical pieces, auction sites like Christie's and Sotheby's offer special auctions throughout the year, providing access to available pieces and their historical sales data.

Remember that investing in art requires time, research, knowledge, and patience. The value of art can fluctuate, so it is essential to seek expert advice and thoroughly understand the market before making any investment decisions.

Frequently asked questions