How to Grow Your Money with Smart Investments for Consultants
Becoming an entrepreneur and launching your consulting business is a great way to increase your salary. You can decide your rates and take on an appropriate number of clients based on what you can handle. However, this is just the first step toward improving your finances. There are many opportunities to invest your income and turn your hard-earned pennies into dimes.
You don’t have to be an investing guru to know how to grow your money. Here are a few ways to make smart investments based on your risk tolerance.
1. Set Up a High-Yield Savings Account (HYSA)
As you grow your consulting business, you will need a business account that is separate from your personal one. This will make it easier to manage your company’s budget and keep up with the inflow and outflow of cash. Depending on your needs, a high-yield savings account might be the perfect choice for your funds.
While most savings accounts have an annual yield of 0.46%, HYSAs offer interest rates of 4% or higher. This means your money grows just by sitting in the bank. This is considered a low-risk way to develop your wealth because the investment isn’t dependent on market conditions. Once you are running your consulting business through your HYSA, you can look into other investments to maximize your potential.
2. Establish a 401(k) or IRA
The next step for growing your finances is to establish a retirement account. Contribute a little more to this account each year and continue saving until you have a healthy nest egg. Fidelity recommends having three times your annual salary saved by 40 and offers other age milestones that you can follow.
Setting up your retirement account is one of the most underappreciated options when considering how to grow your money. Too often, people leave their retirement investments in conservative accounts that don’t grow very fast. If you are younger, try opting for a higher-risk portfolio that could also lead to higher returns. As you approach your retirement age, you can make your portfolio more conservative.
Many online systems allow you to set your risk tolerance. Explore your options when you open your IRA.
3. Test Out the Stock Market
Stocks are one of the most popular ways for people to grow their wealth. You can buy shares for companies that you care about and pivot as stock prices rise or fall based on their performance. However, stocks are risky if you are new to buying them, and they require a lot of hands-on management.
Test different stock options to see what works for you. You can download an app like Robinhood and invest $10 in a stock of your choice to learn more about the process or work with an investment broker who can create a portfolio for you.
Like most investments, diversification is key when allocating your funds. Consider investing in stocks across different industries to reduce your overall risk of losing money.
4. Invest in Other Entrepreneurs
It’s possible to grow your money while helping others. Supporting other entrepreneurs will help them get their businesses off the ground while generating revenue for your bank account. These can also be long-term investments if you buy into different startups as a shareholder.
There are multiple ways to invest in entrepreneurs. You can provide small business loans that your borrowers pay off with interest or use online sites to crowdfund startups. Each of these options comes with different risk and reward levels. However, one of the main benefits is that you can invest in what you are passionate about. You can focus on building up women-owned businesses or support specific industries that need your help.
5. Explore Real Estate Investments
Real estate is a unique investment option because you can use what you invest in. You can actively live and work in the properties you buy. Your real estate investment could involve buying a house for the first time or expanding into a second home. A lake house is a fun real estate investment because you can use it for vacations, rent it out to other guests, and eventually sell the property for a profit.
You also don’t necessarily need a lot of money to invest in real estate. Real estate investment trusts (REITs) give you partial ownership of a real estate portfolio. REITs are meant for people with a lower risk tolerance who also don’t want to physically manage their property investments.
Take Control of Your Money Management
It’s okay if you are starting from the beginning and don’t know how to grow your money! Everyone has different comfort levels when handling their finances and exploring their investment options. Start with the most basic steps—growing your savings and setting up a retirement account—and then look into other more aggressive options that meet your investing needs. Keep learning until you feel more comfortable with money management.
If you’re looking to grow your business with a team of strong women, join the mentorship program at Sweet Sleep Academy. Learn with other entrepreneurs who are just as passionate as you and who are on a similar path. Get to know our instructors and courses to see if our program is right for you.
