Turn extra money into fast cash
June 16, 2021
Have a little extra cash lying around? Make that money work for you through investments and financial planning. Consulting experts and taking a few simple steps can make an enjoyable process out of turning extra cash into more cash.
“Building up personal wealth is not something that happens overnight,” said Jon Frey, financial services professional with New York Life Insurance Company. “No one should ever expect to get rich quick.”
Taking care of basic financial needs should always be the top priority for everybody. Addressing the fundamental needs such as homeowners, health, car and life insurance policies is a necessary step in personal budgeting. While people might fully insure their homes and vehicles, they don’t often think about fully insuring their lives, Frey said.
Frey, who works out of his Edgerton, Wisconsin office, said another basic financial need is creating a retirement account, which can easily be done with just a few hundred dollars. This is a good way to start building up a nest egg.
“If you still have a little extra cash, leave it in a savings account to provide an emergency fund,” he said. “Having a reasonable amount of cash available in a pinch is always a good idea and can give peace of mind.”
When the fundamentals are covered and there is still extra cash, people can start experimenting, taking more risks and having some fun, he said.
Investing in mutual funds can provide good return rates and are very liquid like cash. Mutual funds are a great way to diversify investments and earn interest until the cash is needed.
“Depending on who you are as a person and how comfortable you are, you can play it safe or be aggressive with mutual funds,” Frey said.
Investing in stocks is another good way to make a few extra dollars. Investors can make a lot of money on stocks, but they can also lose a lot, so it’s important to remember to ride out the down times, Frey said.
It’s important to consult financial experts when investing for the first time, he said. Experts can assist not only with investing opportunities but also with assessing one’s personal finances.
“Start with the basics, be patient and layer in more fun investments as you’re able,” Frey said.
Chad Karl, certified financial planner and owner/operator of Chad J. Karl and Associates in Janesville, Wisconsin, believes in the value of Roth IRAs. In a recent article Karl put together about the benefits of Roth IRAs, he wrote “the key argument for going Roth can be summed up in a sentence: paying taxes on your retirement contributions today is better than paying taxes on your retirement savings tomorrow.”
Karl’s article goes on to list benefits of using a Roth IRA instead of a traditional IRA. Those include contributing after-tax dollars, positioning the money for tax-deferred growth, arranging tax-free retirement income, no required withdrawals, no adverse social security taxation effects if money is withdrawn and the option to diversify investments through a Roth IRA.
Anybody with an earned income, including minors, can contribute to a Roth IRA. Contributions can made throughout a person’s entire life.