Last week, I was at a birthday party for my friend’s 3 year old child. It was a group of guys that I’ve know since college, and now we’re all working professionals in the stage of our lives where we’re married and have young children. One friend said that the income from his day job just wasn’t going to cut it. He wanted to make more. Now he wasn’t saying that they couldn’t make ends meet. I think he earns a good salary, it’s just tough living in NYC with a family. Plus, they recently became a one-income family and they are thinking about moving since they live in a 2-bedroom condo with two kids. So the topic of make money in ventures outside of our primary job came up. Here are the ideas that were discussed:
I think investing in stocks is one of the best ways to make your money work for you. My friends talked about the money they’ve made investing in stocks such as Apple, Tesla, and in 3-D Printing companies, among others. I joined in the conversation about buying stocks as I have a small amount in individual stocks. But I really think that index investing is the best bet. Basically, I love the low costs, simplicity and often superior returns. For more of my thoughts on index investing, read Why Invest in Index Funds? and When Being Cheap and Lazy is Better. However, if you are also interested in investing in individual stocks, check out Bryan’s blog Income Surfer, who provides a great resource regarding investing in stocks. My friends weren’t too fond of index investing and think they have a better shot at higher returns investing by themselves. I’ll stick with index funds for the bulk of my money, and satisfy my “I can get higher returns” side by investing a small portion in individual stocks.
My friend said that he was considering investing in real property in New York City. In the last few years, the housing prices in NYC have increased substantially. There’s a mindset with many I know, that there will always be a high demand for property in NYC so it will always be a good investment. I’m not sure about that, but that is the prevailing mindset of many. As housing prices have skyrocketed, my friend is thinking about buying in neighborhoods that are “up and coming” or prospective neighborhoods that might see growth in the future. The highly sought after areas like Williamsburg, DUMBO in Brooklyn, and Long Island City in Queens were once mainly factories and warehouses…not neighborhoods people pay big money to move to. It’s an interesting idea, but I’m not sure I have the money or the risk tolerance to try this plan. I have recently thought about buying property in lower cost areas, such as Western New York where my wife went to school and where my brother-in-law still resides, and renting it out. It’s just a thought for now though, and I’ll definitely need to learn more about investing in real estate and in being a landlord. Dave from The New York Budget just wrote about investing in a turnkey property, which is pretty awesome since I might look into doing that in the future.
I invest a small amount of money in Lending Club, a peer-to-peer lending platform, where investors like you and me can provide micro loans (as small as $25) that get pooled together for someone that needs the loan. The borrowers pay interest rates depending on various factors such as their creditworthiness, and Lending Club charges a small fee of 1% for the service. Currently, according to Lending Club, my net annualized return is 7.4%, which is great compared to a savings account, but not as great when compared to stocks. As I mentioned earlier, I only invest a small amount of money, as I’m not sure it’s the best place for my money when considering the risks and returns.
Back in 2006, my friend, who was also at the party, and I decided to try and make some money from the internet. We didn’t really know what we were doing, which resulted in us quitting. That was pretty unfortunate since I keep hearing that it was much easier to make money blogging back then. We started various websites and an eBay store. In any case, AdSense sent me a check for $25 about a year ago since our AdSense account had been inactive for such a long time. It is one of the reasons which motivated me to start a blog. I haven’t yet learned how to monetize property though, as I don’t even have $25 in my AdSense account. Sam from Frugaling posted that he made $35,000 during his first year blogging so it can be done. For a quick rundown on how to make money blogging, check out DC’s post on Young Adult Money entitled 5 Ways to Make Money Blogging. Steve from My Wife Quit Her Job has a great blog and online course for those who want to start an online business.
Invest in yourself. A friend of mine is not happy with his current position and salary. He plans on acquiring some marketable skills to increase his salary. You don’t necessarily have to quit your job to acquire new skills, as it’s possible to learn new skills online.
Forex Trading (Currency trading)
One of my friends mentioned this investment option, but I’m not sure I would recommend it. He works in that field and says he has done well in investing in currency markets. It seems pretty volatile though. However, you can open a free practice account if you are interested.
So what are you investing in?