The Smart Investor: 8 Ways to Make Money Work for You

Did you know that investors in 2021 saw profit margins of 30% on average?

Investing is far and away the best of all income opportunities to make big money–if you know what you’re doing, that is. There’s a big difference between the fool and the smart investor. Being a smart investor requires a lot more than just reading a self-help book.

If you’re not sure how to start, you’ve come to the right place. We’re here to give you everything you need to build wealth and make the most of your financial resources.

Keep reading for eight tips to make your money work for you.

1. The Smart Investor Always Keeps Some Money in a Savings Account

A savings account is a no-brainer for most. But what tends to happen is you keep money in the savings account, then pull it back out on a whim. Resisting the urge to pull some out for impulse buys will be well worth the patience in the end.

It’s important not just to throw it in any old savings account with only a 1-2% return. You should look for a high-yield savings account. These may have fees and higher account minimums.

With enough patience, you can ensure that you make a lot of money in the long run.

2. They Diversify Their Investment Portfolio

As the saying goes, don’t you dare put all your eggs in one basket. Even an inside trader wouldn’t risk sinking all their investment funds into a venture they had confidential data on.

Diversifying your investment options will ensure you get the most successful returns. You could have some money in stocks, and some in a Las Vegas entertainment investment.

While you should spread out the money, do focus more of it on “safe” investments. Stocks that pay guaranteed dividends, for example, are a great way to keep a long-term revenue stream. Then focus smaller amounts on higher-risk investments.

3. They Take Caution With Get-Rich-Quick Schemes

It happens to everyone at least once. A friend tells you to pour all your money into a venture that is guaranteed to make everyone rich. Unfortunately, ventures like these rarely happen–rarely enough that any investor should be wary.

Avoid the hype as much as you can, even if you see wild promises of 50% returns or claims that current investors have thousands. When the hype dies down, most of the people who put down money will wish they hadn’t.

Instead, focus on more level-headed investment opportunities. These are those that won’t pressure you to pay now.

4. They Do Research Well Before Investing

Don’t invest based solely on the performance of a stock or crypto. Instead, take a look at the proprietors, managers, and others. You want to avoid CEOs with a history of jumping from one failed company to another, for example.

Avoid basing your entire opinion on social media. Pay attention to the big, seasoned investors. These veterans have skin in the game and are wary of all the flashy news that turns out to be bunk.

5. They Take Crypto With a Grain of Salt

Cryptocurrency is controversial, to say the least. It began as an anonymous, secure payment method. These days, though, it’s only used for criminal activity and wild currency speculation.

This isn’t to say you shouldn’t invest in cryptocurrency, but rather that you should be cautious with it. Cryptocurrency is notoriously volatile, and you may have to wait years for the price to recover. Prioritize established cryptocurrencies such as Bitcoin and Ethereum over other cryptocurrencies.

6. They Mind Investment Costs and Fees

Every investment comes with little fees and costs that may seem small and go unnoticed. But these small bits add up into hefty lump sums. They may come as a shock when you expected a much higher return.

Crypto gas fees are an excellent example of this. Buying, selling, or even using crypto results in mini “gas” fees to process the transaction. These can add up fast, especially if you do frequent trading.

And on that note…

7. They Avoid Day Trading

Day trading may seem like a solid strategy. You buy when a stock is low, then sell it when it’s a few dollars higher the same day or soon after. With automation, you can make this happen without any effort on your part.

But not so fast! Tax law means your profits may be subject to a tax on short-term gains in capital. That means all the money you made could be going straight out the window, and then some.

Plus, day trading doesn’t allow you to reap the long-term benefits of stocks. Some pay dividends and others may perform much better if you give them some time to mature. Otherwise, you’ll set yourself up for major disappointment with minimal returns.

8. They Keep Everything Under Lock and Key

Making sound investments is one thing, but many people fail to go the extra mile to protect their assets. These days, most–if not all–of your investments are online. When most people have a password that amounts to “password123” and no 2FA, that’s a huge problem.

Use a password manager and replace all of your passwords with long and strong passwords. Sign up for security notifications and activate two-step authentication to prevent anyone from accessing your account without permission. Further, make sure to update devices and avoid clicking on suspicious emails.

Start Investing Today

The smart investor doesn’t just have some clever investment ideas to make money. They take the wisdom provided by skilled investors who have earned money the slow and boring ways for years. At the end of the day, it’s these patient, long-con methods that earn the biggest returns.

Follow our blog for more financial tips.