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Apache is functioning normally

May 27, 2023 by Brett Tams

When I worked in management consulting, one of my responsibilities was to help my company figure out ways to make money while we slept. As a consulting business, our revenue stream came from selling the hours of the people who worked at our company. But to grow our margins, we knew we had to scale our time. This is where I first learned about passive income — the Holy Grail of the business world.

Now that I’m in my 30s, I think a lot about how to direct my active streams of income into passive income opportunities. Here are some things I’ve learned about active and passive income in my wealth-building journey.

What’s Ahead:

What Is Active Income?

Active income is earned by trading your time for money. Most people at the beginning of their careers are focused solely on earning active income to make a living.

What Is Passive Income?

Passive income is earned from income-producing assets. Someone who has passive income is not trading their time for money. Instead, the assets they own produce income without much involvement from the owner of the asset.

With the rise of financial influencers and the FIRE movement, finding ways to earn passive income has become a popular topic in the personal finance community.

Is Any Income Truly ‘Passive’?

The idea of earning truly passive income sounds amazing, right? But what’s often not discussed about passive income is that unless you inherit passive income-producing assets, creating passive income streams actually requires a substantial amount of active work.

Famous American entrepreneur Gary Vaynerchuk has gone as far as to say that truly passive income doesn’t exist outside of passive public market investing and rental income.

I tend to agree with Gary that the term ‘passive’ income is something of a misnomer. Creating passive income is never truly passive; there is no free lunch when it comes to financial mobility!

But thinking of income in active and passive terms might nonetheless have some benefits for those who are assessing their current financial status and crafting their wealth-building strategy. For that reason, I’ll break down the broad differences between active and passive income streams, as well as the most prominent ways to generate active or passive income.

Pros & Cons of Active Income

Pros

Allows you to develop a specific skill or expertise consistently
May provide social interaction and camaraderie associated with a traditional worksite

Cons

Trades time for money
Takes time away from doing other things
Cannot scale income potential beyond time constraints
Can be taxed at high rates

Pros & Cons of Passive Income

Pros

Generates money while sleeping, vacationing, etc.
Frees up more time for recreational activities
Subject to potential tax deductions
Scales income potential beyond time constraints
Does not require physical presence at a work site

Cons

Often requires you to create active income first
Usually harder to create than active income

Types of Active Income

Salary and Wages

The most basic and obvious form of active income is the salary that you earn from a typical job. A salary is a fixed amount received for working a regular schedule like 9 to 5, Monday through Friday. While a salary is a consistent form of active income, it can be taken away at a moment’s notice due to layoffs or downsizing. Most people earn their living from this type of income.

Bonuses and Commissions

Bonuses and commissions are other forms of active income. This type of income is not fixed and can vary dramatically based on the type of work performed. Many jobs can have a bonus or commission element added to a base salary, while other jobs can be 100% commission based.

Real estate agents, commercial real estate sales professionals, and other types of salespeople tend to fall into this income category. 100% commission-based jobs tend to have higher earning potential compared to salaried positions. However, they are also highly competitive, and their profitability is subject to ups and downs based on the economy, seasonality, and other factors.

Read more: How to Become a Real Estate Agent

Consulting and Freelancing

Freelancing and consulting fees are other types of active income that can either make up 100% of one’s income or serve as a side hustle. Those with valuable skills in high demand are often able to build side businesses, selling their time for specific short-term projects or long-term contracts. As of August 2021, there are 57 million freelancers working in the U.S., with 10 million more considering freelancing.

Looking ahead, more and more businesses are noting they’re willing to hire freelancers to support their mission, growth, and revenue.

Being a freelancer or consultant requires an entrepreneurial spirit, as this type of work can be very inconsistent and requires building a strong brand/reputation. Some of the most popular types of freelance work include graphic design, software development, copywriting, and photography.

Read more: 35+ Side Hustle Ideas

Equity Compensation

Equity compensation is a type of bonus that is given out at public or private companies to senior individuals or particularly valuable employees. Different types of equity compensation include straight shares, stock options, and Restricted Stock Units (RSUs).

It’s not uncommon for equity compensation to make up most of an individual’s income. For example, in 2020, 85% of an average CEO’s income was stock-related compensation.

Capital Gains

Buying and selling certain types of assets, like stocks and real estate, can generate capital gains if the asset’s sale price was higher than its original purchase price. For example, you might buy shares in a company while its stock price is low and then sell those shares later after the stock’s price has increased. The difference between the price you paid and the price you sold at is a capital gain.

Generating capital gains as a means of consistent income requires a significant amount of work, expertise, and risk-taking. Capital gains also have different tax treatments depending on how and when they are generated.

Read more: Claiming Capital Gains and Losses

Renting Out Property

Listing your property on sites like Airbnb can help you earn active income. While listing your property for rent may not require a significant investment of time and energy upfront, it’s not a set-it-and-forget-it income source.

Actively managing your listings, communicating with renters, and maintaining your property certainly requires active effort (unless you have a property manager).

Old Goods and Furniture Flipping

I’ve seen lots of people recently on TikTok and Instagram building side businesses by taking old or broken furniture, refurbishing it, and selling it for a profit. If you are handy and have an eye for design, this can be a great way of making active income given the low startup costs.

In addition to making money from selling the furniture, after you’ve built an audience you can sign brand partners and feature their products on your social media pages to generate even more income. Lastly, this type of business is a great way to help recycle old products that would have otherwise been thrown out.

Types of Passive Income

Interest and Dividends

Interest from your savings can be generated from high-yield savings accounts or by investing in CDs or bonds.

Dividends are paid to the shareholders of public companies. Not all companies pay dividends and the amount of dividends paid varies significantly. While earning dividends is passive income, choosing the right investments that generate dividends is a very active and time-consuming process.

In my experience, those looking to earn dividends can typically expect returns of 1–5%.

Rental Income

You can earn passive income from real estate by investing in rental properties, commercial real estate, public real estate investment trusts, or real estate crowdfunding platforms. Income-generating real estate can also provide landlords with tax benefits by deducting depreciation costs, property management expenses, insurance, and other expenses.

But there’s always an active element of real estate investing, no matter what type of real estate you invest in. This includes property management, dealing with tenants, managing relationships with lenders or investors, ensuring upkeep, or simply picking the right real estate projects to invest in. Some forms of real estate investing can become so time consuming that many personal finance experts question if real estate investing can be considered passive at all.

Read more: How to Invest in Real Estate

Peer-to-Peer (P2P) Lending

Peer-to-peer lending has attracted investors looking for an alternative to persistently low interest rates on savings accounts and bond yields. With P2P loans, investors make unsecured personal loans to others and can earn high returns.

While P2P lending has exploded in popularity (check out Lending Club and Prosper), these investments are very risky. The loans are often not secured against collateral, are not FDIC insured, and money invested in P2P lending can be difficult to access in times of economic stress.

Digital Product, Online Course, or Community Development

Creating digital products, courses, or online communities can be one of the best ways to earn passive income if you can package your skills and knowledge and sell it to a group of customers. In today’s digital age, the costs of creating a course, digital product, or community have never been lower, and all you really need is a computer and some creativity.

While there are lots of instances of everyday people earning millions on their digital products, don’t forget that getting to that point likely required a lot of work. Keeping these types of products relevant and up to date after launch also requires time, effort, and attention, not to mention having to market your product and keep up community engagement.

If you are interested in starting something like this up, platforms like Thinkific, Teachable, and Patreon are all options to explore.

YouTube/TikTok Ad Revenue

I became fascinated by the prospect of earning money on YouTube after coming across financial influencer Graham Stephan. Earning money on YouTube or Tik Tok generally comes down to building your channel’s audience and monetizing content through ads or affiliate marketing links. Once your presence meets a critical mass, every video you create has the potential to become an income-generating asset.

On the surface, making money on YouTube seems amazing, but again, it takes a lot of work and dedication to get there. For example, Graham has mentioned having to post videos at least three times a week for several years to get traction. And it often takes audiences of tens of thousands or hundreds of thousands of followers to earn any money.

But there’s lots of potential to earn sizable passive income from YouTube after you build an audience. The average YouTuber can make $3 to $5 per 1,000 video views and the top YouTubers can make millions annually.

Final Thoughts

Passive income can be a great way to earn more while working a regular 9 to 5, or it could fully replace your current stream(s) of active income entirely.

When it comes to building real wealth, however, the discussion around active vs. passive income is more nuanced.

According to a five-year study of 233 wealthy individuals, a common thread between them was that self-made millionaires generated income from multiple sources. 65% of them had three streams of income, 45% had four streams of income, and 29% had five or more streams of income.

These figures suggest that when it comes to building wealth, it’s not just a question of prioritizing passive vs. active income. Rather, it’s about generating multiple streams of income and scaling your time.

Personally, I have four streams of income:

The income I make from my 9 to 5
Investment capital gains
Dividends
Freelancing work

You can leave it to your own creativity and aspirations to find what constellation of passive and active income streams works best for you. But remember, whether you are looking to create passive or active income, there is no free lunch, and any source of income that ultimately becomes passive will likely start as a highly active pursuit.

Apache is functioning normally

May 26, 2023 by Brett Tams

In the past, you had to drive to your bank and work with a teller to manage your deposit accounts. These days, however, you have the option to complete virtually any banking need with any device that has internet access. You can pull out your smartphone and deposit a check. Or you may use your laptop to check your account balance.

That’s where banks called neobanks come in. It’s no surprise that neobanks are more popular than ever before. Let’s take a closer look at what they are and how they work so you can decide whether a neobank makes sense for your particular situation.

20 Best Neobanks

While traditional banks take up more market share than neobanks, you can still find a good amount of them if you do your research and shop around. The right neobank for you will depend on your unique lifestyle, needs, and preferences. To help you hone in on the ideal option, here’s our list of the top neobanks of 2023.

1. Chime

Founded in 2012, Chime is a financial technology company that offers banking services from The Bancorp Bank, N.A. and Stride Bank N.A. The Chime Checking Account is free of monthly maintenance fees and no minimum balance requirements.

Its perks include early direct deposit, automated savings features, access to over 60,000 or more fee-free ATMs, and free debit card replacement. In addition, you can take advantage of SpotMe and get up to $200 in fee-free overdrafts.

There’s also a Chime’s Savings Account, which offers a competitive interest rate with no cap on the amount of interest you can earn. Other services include Secured Chime Credit Builder Visa® Credit Card that doesn’t require a credit check, making it a suitable option if you have limited credit. Chime should be on your radar if you prefer a one-stop-shop for all of your banking needs.

You can read our full Chime review to learn more.

2. GO2bank

For more than a decade, Green Dot Corporation has specialized in alternative banking products. In 2013, GoBank made its debut as the first digital bank offering digital financial services. Then, in 2021, the company launched GO2bank, its second online bank.

GO2bank stands out from other neobanks which require you to sign up online because you can pick up their debit cards in person at Walmart and other popular retailers. GO2bank’s bank account tends to be a popular product in addition to its secured credit card that can help you build credit.

For a comprehensive overview, read our full GO2bank review.

3. Current

Since its inception in 2015, Current, which is not a bank, but a fintech company based in New York City, has partnered with Choice Financial Group and Metropolitan Commercial Bank to offer banking services. Its flagship products are a personal checking and debit card you can access via a mobile app on any iOS or Android device.

Even though Current’s product line is limited, the neobank prides itself on no shortage of perks and benefits. You can get your deposit up to two days early and earn cash back for debit card spending from more than 14,000 merchants. Additionally, Current doesn’t charge minimum balance fees or bank transfer fees and offers fee-free ATM withdrawals from ATMs in the Allpoint network.

If you would like to learn more, take a look at our Current review.

4. Revolut

Founded in 2015, Revolut is one of the largest European neobanks, serving more than 16 million customers. It has expanded its footprint to the U.S. market and has plans to become one of the most reputable neobanks in the world.

Revolut is unique in that it offers a wide array of financial services, such as bank accounts, debit cards, peer-to-peer payments, cryptocurrency, and currency exchange. It supports both individual consumers and businesses with more than 30 currencies. For a neobank with a diverse lineup of offerings, Revolut has you covered.

To learn more, read our full Revolut review.

5. Quontic Bank

Quontic Bank is a full-service, FDIC-insured online bank that was founded in 2002. It offers a range of banking products and services, including checking and savings accounts, credit cards, mortgages, and business banking solutions.

They offer some of the best annual percentage yields (APYs) in the industry. Quontic accounts come equipped with no overdraft fees, no incoming wire transfer fees, no monthly service fees, and access to over 90,000 surcharge-free ATMs.

Quontic also has a savings accounts feature called “Roundup”, which makes saving money simple and easy. In addition, they have a responsive U.S. based customer service team available to assist with any questions or concerns.

Read our full Quontic review for more information.

6. Dave

When Dave began in 2017, its sole focus was paycheck advances. Over time, it evolved to offer a checking account with no minimum balance requirements. If you become a Dave customer, you can receive early access to your paycheck, without a credit check or interest charges.

Dave also offers handy built-in budgeting features and doesn’t charge overdraft fees or ATM fees, as long as you use an ATM from the MoneyPass network. Dave may make sense if you’d like the option for small cash advances to get you through a financial hiccup from time to time.

See also: Free Online Checking Accounts: No Opening Deposit Required

7. Albert

Albert began as a money management app in 2016, but is now a personalized banking service that has attracted over 6 million customers. This digital banking account offers cash back and a range of benefits.

These including no-interest cash advances of up to $250, integrated budgeting and savings tools, and annual savings bonuses of up to 0.10%. There are no minimum balance requirements or overdraft fees. However, there is a minimum monthly fee of $4. Keep in mind that you’ll need to have an external bank account to open an account with Albert.

8. Varo

Varo Bank began in 2015 as a fintech company that partnered with The Bancorp Bank. In 2020, it acquired its own national banking charter, making it different from other neobanks you might come across. Even though Varo operates as an actual bank, it focuses on online banking via its website and mobile app.

Its checking account is free of monthly fees and there’s no minimum balance requirement. Plus it comes with a debit card. In addition, Varo partners with more than 55,000 ATMs through the Allpoint ATM network.

We can’t forget its other perks, such as contactless payments, credit cards with reporting to the major credit bureaus, early direct deposits, and no foreign transaction fee or transfer fees. Varo might be worthwhile if you’re looking for a checking account with all the bells and whistles.

Read our Varo Bank review to learn more.

9. Aspiration

Aspiration was founded in 2013 under the motto “Do Well. Do Good.” It partners with financial institutions like Coastal Community Bank and Beneficial State Bank to offer cash accounts, savings accounts, and a few investment accounts.

Aspiration’s most popular product is the Aspiration Spend & Save Account, which is a hybrid of a checking account and savings account. There’s also the Zero credit card, which offers cash back and plants a tree every time you make a transaction. Aspiration can be a good fit if you’d like to get rewarded for your spending and like the idea of one account for your checking and savings goals.

Read our full review of Aspiration to learn more.

10. Bluevine

Bluevine made its debut in 2013 as a fintech company with a mission to improve banking for small and mid-sized business owners. Its flagship product is the Bluevine Business Checking. It’s completely free and comes with a competitive annual percentage yield and unlimited transactions. This is rarely seen in the world of business checking.

In addition to the business checking account, Bluevine offers financing products, such as lines of credit of up to $250,000. Bluevine should be on your radar if you’re a business owner in search of fast, convenient startup banking and financing.

11. SoFi

Social Finance or SoFi entered the market as a student loan refinance company. Recently, however, the fintech company received its own bank charter to offer digital banking services. You can use the SoFi Checking and Savings combo account to manage your spending and saving needs in one place.

Fortunately, SoFi doesn’t charge monthly maintenance fees, overdraft fees, and ATM fees. Additional perks and extras include no-fee overdraft coverage, sub accounts for various savings goals, and additional products like credit cards, cryptocurrency trading, and retirement accounts, like an individual retirement account.

Read our full review of SoFi to learn more.

12. Acorns

Acorns has a reputation as an easy-to-use micro investing app. Since 2012, many people have downloaded it on their iOS or Android devices to invest their spare change. Over time, Acorns has expanded to offer a checking account.

You can open Acorns Checking for free and enjoy perks such as no monthly or overdraft fees, early direct deposit, mobile check deposit, and access to a network of 55,000 ATMs.

The checking account seamlessly integrates into the Acorns micro investing feature. Plus when you use your Acorns debit card, you can earn cash back at participating retailers and use it to invest, along with your spare change. If you’d like to get started with investing, Acorns is worth considering.

13. One

One is a neobank owned by Walmart. It offers a budget-friendly overdraft program with customized budgeting and savings options for its customers. One’s banking account allows users to organize their money into subaccounts called Pockets.

Pockets offer saving rates of 1% on up to $5,000 for any customer and 1% on up to $25,000 for customers with direct deposit. Additionally, One provides fee-free overdraft coverage of up to $200 for customers with direct deposits of at least $500 per month.

14. Cheese

Cheese is a digital banking platform that was launched in March 2021 and caters specifically to the immigrant and Asian American communities. It offers up to 10% cash back at 10,000 businesses, including Asian-owned businesses and restaurants.

Cheese’s customer support is available in English and Chinese, with more languages to be added in the future. One of the benefits of opening an account with Cheese is that accounts earn interest and do not have monthly fees or ATM fees when using the national MoneyPass ATM network.

15. Unifimoney

Unifimoney is a money management and investment app that helps you manage your banking, investing, and borrowing needs all in one place. It caters to account holders who earn at least $100,000 per year but have significant amounts of student debt. You can download Unifimoney to pay bills, deposit checks, and write checks.

It’s unique in that it also allows you to refinance student loan debt and can create a diverse investment portfolio with particular stocks, cryptocurrencies, precious metals, stocks, and exchange-traded funds (ETFs).

In addition, you can turn to Unifimoney for insurance products, like car insurance and health savings accounts (HSAs). If you’d like to get started with Unifimoney, open the Unifimoney high-yield checking account with as little as $100.

16. NorthOne

Headquartered in New York and founded in 2016, NorthOne offers digital business banking services. If you’re a startup, entrepreneur, or small business owner, NorthOne can be a good fit. It differs from other banks that serve businesses in that there are no transaction limits that require premium upgrades.

You can open a business bank account for a flat $10 monthly fee and won’t have to worry about additional fees for deposits, transfers, ACH payments, or app integrations. In addition, you’ll get to create as many “Envelopes” or sub accounts as you want so you can save for payroll, taxes, and other business needs.

17. Oxygen

San-Francisco based Oxygen focuses on two accounts: the free thinker account for individuals and the pioneer account for business users. Even though it doesn’t charge fees, like monthly fees, ACH fees, and overdraft fees, you will have to pay an annual fee that can go up to a few hundred dollars.

While most neobanks don’t allow for cash deposits, Oxygen does. As long as you have an Oxygen bank account, you can make deposits at GreenDot locations, which are usually located inside popular retailers, like Walmart, Walgreens, and CVS. If you don’t mind paying an annual fee and like the convenience of being able to deposit cash, Oxygen is worth exploring.

18. Bella

Bella is a fairly new player in the neobanking space. Its partner bank is nbkc bank, which allows it to provide banking services. With Bella’s checking account rewards program, you can receive a random percentage of cash back on randomly selected purchases.

The cash back amount may be anywhere from 5% to 200%. Like most neobanks, Bella doesn’t charge monthly fees, ATM fees, and overdraft fees. You can also opt for a no-fee savings account. Bella accounts are FDIC insured for up to $5,000,000.

19. Lili

Lilli services small business owners and believes that managing two accounts is a hassle. That’s why this neobank offers a single account you can use for both your business and personal transactions.

Come tax time, Lili will eliminate financial stress and let you automatically save a certain percentage of your income into a “tax bucket.” Plus, it produces quarterly and yearly reports instantly, reducing your tax prep costs. While the Lili Standard account is free, Lili Pro will run you a couple dollars per month.

If you upgrade to Lili Pro, you’ll get cashback rewards on all your debit purchases and 1% interest on your savings accounts. Lili could be a solid pick if you’re a freelancer or solopreneur hoping to simplify your finances.

20. Monzo

Monzo is a UK-based neobank that just opened up to the U.S. market in late 2022. All accounts are insured by the FDIC for up to $250,000. Plus fee-free withdrawals are available at more than 38,000 ATMs.

Furthermore, Monzo is similar to Aspiration as it strives to protect the planet. Additionally, this neobank offers budgeting tools that can help you meet various savings goals.

What is a neobank?

Often called challenger banks, neobanks have recently entered the financial services industry and challenged banking norms. Most neobanks are financial technology or fintech companies that offer the same banking services you may find at traditional banks, like Bank of America or PNC.

But they promote innovation and act like digital only banks or online banks as they don’t have any physical branches and operate via apps. Most of these apps are user-friendly and loaded with a variety of handy features, such as early deposit and savings tools to simplify the banking experience. They are specifically designed to give you greater control of how you manage and spend your money.

Also since neobanks don’t have any physical branches, their overhead costs and customer acquisition costs are low and enable them to offer more affordable banking products and services. Many neobanks let you choose from a number of free and paid premium subscription services.

Are neobanks safe?

Since neobanks are fairly new and different from many traditional banks, you might wonder whether they’re safe. Fortunately, most of them are very safe because they operate within a regulated market.

These financial institutions typically work with U.S. banks to offer FDIC-insured accounts, which protect your money from potential bank failures and the losses that come with them. To help determine if a neobank is safe, check out their ratings and reviews on reputable websites like the Better Business Bureau (BBB).

Neobanks vs. Traditional Banks

To further explain neobanks and their modern spin on traditional banking, let’s take a closer look at how they differ from traditional banks.

Neobanks

Neobanks operate without physical branches. To take advantage of their offerings, you’ll likely need to download an app and provide some personal information.

While you can expect fewer banking and credit products than you’d find at traditional banks, you’ll reap the benefits of lower fees and extras that improve the overall banking experience.

Some neobanks have decided to expand their lineup of products and services to create more of a one-stop-shop you’d get from a traditional bank. Since most neobanks don’t earn money from lending, like incumbent banks, their business model depends on interchange fees or transaction fees, which usually come from debit cards. They might also charge for premium accounts and extra features.

Traditional Banks

Traditional banks often have brick-and-mortar locations across the country or in a specific geographic region or area. But many of them also have digital banking divisions in which you can perform banking services online.

Most banks focus on strong customer relationships and earning interest through loans as well as account fees from banking, lending, and investing. They typically target customers who appreciate customer engagement and a traditional in-person banking experience.

See also: Best Alternatives to Traditional Banks

Pros & Cons of Neobanks

Just like all types of financial institutions, neobanks have benefits and drawbacks you should consider, including:

Pros

Lower fees: Compared to traditional banks, neobanks offer lower fees. That’s because they don’t have the high overhead costs associated with the upkeep of physical branches.
Higher rates: Neobanks often pride themselves on higher interest rates on their checking and savings accounts. This can make it easier and faster for you to save money.
Convenience: Perhaps the greatest benefit of neobanks is the convenience they bring. You can perform a variety of banking tasks, like depositing checks or making payments from your smartphone device, round-the-clock.
Easy access: You can manage your banking 24/7 without ever having to leave your home and visit a local branch. All you have to do is download an app from the app store.
Simple setup: It’s usually fast and easy to open an account with neobanks. Many of them will approve you, regardless of your credit score or credit history.
Focused services: While most neobanks don’t offer all the services you might find at traditional banks, the few services they do provide focus on service quality and are typically loaded with perks and benefits. For example, you can get a no fee checking account with cash back rewards.

Cons

No bank charters: Neobanks don’t have bank charters. Instead, they often partner with traditional banks to insure their products. Before you move forward with a neobank, ensure they partner with a Federal Deposit Insurance Corp or FDIC-insured bank and offer their own FDIC insurance.
Customer service restrictions: Since neobanks operate on app instead of through physical branches, customer service can be a downside. You may have to turn to chatbots or social media for basic banking questions and support. If you notice fraud in your account, it may be more difficult to resolve the issue.
Fewer services: Traditional banks usually pride themselves on a long list of services, including loans, wealth management, and brokerage services. Neobanks, however, tend to limit their offerings to checking accounts and savings accounts.
Unproven track record: Neobanks are still in the startup phase as many made their debut within the last few years. This means that they may fail and force you to look elsewhere for your banking needs.
Require knowledge of technology: While most neobank apps are intuitive and designed for the average person to use with ease, they may still be inconvenient for some people. If you don’t consider yourself tech literate, a neobank might not make sense.

Bottom Line

There’s no denying that neobanks have revolutionized the banking industry and financial industry. If your primary goal is convenience and you prefer mobile or online banking, a neobank can be a great alternative to a traditional bank or legacy bank. Just make sure you explore all your options and read the fine print before you choose one.

Source: crediful.com

Apache is functioning normally

May 25, 2023 by Brett Tams

About the series…

When most people talk about money management, they discuss tactics. Occasionally, you’ll encounter someone who elevates the discussion to strategy, rather than simply scattershot tactics.

But what’s missing from both conversations — both tactics and strategy — is a wider-lens look at how to become a better thinker; how to become a crisp, clear decision-maker.

How to think from first principles. How to better your brain. How to cultivate the wisdom to know the next move.

This series is an attempt to bring first principles thinking into the conversation around money. Welcome to the inaugural post.

Rethinking the FIRE Construct

I’ve been thinking about FIRE in new terms:

Financial psychology

Investing

Real estate

Entrepreneurship

Together, these four concepts encompass everything we need for mastery over our financial life. And the letters are ordered perfectly: start with mindset and master the basics, then shift focus to “the IRE of FIRE” — high-growth activities such as making investments, buying real estate, and starting a side hustle or business.

So I’m trying something new.

With every post in this First Principles series, I’ll share insights into these four domains, with the goal being to fill each post with original and unusual insights.

My commitment to you is to write a series with nuance. Too much personal finance content lives in an echo chamber, rehashing the same tired lines and prescriptive, one-size-fits-all advice. You won’t find that here. This series is built to make you smarter. Together, we’ll uncover mental models, examine frameworks, rethink perspectives, peer at our cognitive biases and emotional triggers, and engage in the deep work of thinking about how to think.

This is a series about how to think from first principles, how to be a better, smarter, wiser decision-maker, told through the lens of money.

Let’s begin — and in today’s introductory post, we’ll kickoff with a deeper look at each of these four concepts.

Financial Psychology

If you say “personal finance 101,” most people immediately think of tactics: building automations, setting up cash reserves, hiding money from yourself. They think of bulk cooking, buying used cars, and the low-hanging-fruit of frugality.

Those tactics are great. But starting there is a mistake.

Bigger, more sustained improvements come from understanding why we spend, why we behave irrationally with money, why there’s a behavior gap between what we pledge and what we do.

The key to finding your financial footing is understanding the psychology of money.

Want to stop spending so much on the weekends? Start by understanding the impulse behind the purchase. We don’t buy items, we buy feelings. Figure out what feelings you’re trying to purchase — and the triggers and root causes behind that — and your spending will adjust naturally.

Want to get (and stay) out of consumer debt? Start with the psychology of debt — both the factors that led you into debt, and the mindset that the debt burden creates.

Most of us know what to do (spend less than you earn, invest the difference), but translating awareness into action is tough. Tactics are necessary, but not sufficient.

Understanding the psychology of money is at the core of mastering our financial mental game. And until we master the mindset, then we’ll never follow through with the tactics.

Investing

Most discussion around investments fall into two categories:

1: The fundamentals. These are the articles that teach basics around how the system works: “the 401k, 403b, and IRA are examples of retirement accounts,” or “stocks and bonds are examples of assets.”

2: The horserace. These are the articles that track what the market is doing today, or this week — market moves, winners and losers.

You can either read evergreen articles on long-term investing, or you can track today’s stock performance; there’s not much information outside of those two domains.

But there are three important elements missing from this conversation:

1: The strategy. Investing decisions need to be made in the context of your life (or as my buddy Joe says on the podcast, “start with the end in mind.”) These strategic discussions around “what’s the end goal?” and “how do I reverse engineer?” often get overlooked, which is why so many investors experience FOMO, the fear of missing out. If there’s no clarity of purpose, then the only goal is “more.” And when the only goal is “more,” then the Next Hot Stock Tip seems too tempting to pass up.

2: The psychology. The greatest investors are the ones who have a strong awareness of investor psychology: fear and greed, FOMO, loss aversion, recall bias, the availability heuristic, our tendency to overvalue what we already own, and other cognitive biases.

3: The new frontier. Cryptocurrencies for conservative, thoughtful, diversified investors. We live in a world with SPACs and NFTs, acronyms that the average investor didn’t know a few years ago. And at the moment, millions of people are learning about these next-frontier innovations primarily from Twitter and TikTok.

I’ll be writing about investments with a focus on these three elements.

SPOTLIGHT ON…

One of the most fascinating trends of today is the decoupling of skills from diplomas.

The established order used to demand that we dig ourselves into debt for a formal education in order to be considered skilled, useful job candidates. The advent of specific skills-based online learning has transformed this, making it possible to land a six-figure career with only a few months of training.

For a deeper discussion around this decoupling — and how it affects anyone who wants a higher-paying job — watch this video conversation that I had with Jonathan Mendonsa, co-host of the Choose FI podcast.

Real Estate

Real estate is one of the few asset classes that’s a hybrid between an investment and an entrepreneurial venture, so it’s perfect that the “R” in “FIRE” fits in-between the “I” of investing and the “E” of entrepreneurship.

Housing prices have soared in 2021, and the psychological response has been fascinating. When macro events happen, our brains grasp for an explanation.

Many people have reflexively reached for the simplistic, reductive explanation that home prices are high because buyers are irrationally exuberant, and that what goes up must come down. Many people have a fear of heights: the soaring new highs of the market must *necessarily* mean that there will come a crash … right?

After all, that’s what happened in 2008 … so isn’t this history repeating itself?

Yet it takes more than new highs to cause a crash. And there are major differences between the market peaks of 2021 and the peaks of 2006-07.

In 2006-07, we faced a housing surplus. Builders were over-developing, speculating that demand would be able to keep up with the huge spike in supply.

In 2021, we face a housing shortage. New construction permits and renovation permits are low. Lumber prices are high. Labor is scarce. New household formation is high. The supply can’t keep pace with demand.

To be clear, this isn’t a prediction of the future. I’m opposed to making predictions (though I’m an advocate of probabilistic thinking).

It’s simply an observation that the factors influencing each run-up are different — so it’s unwise to assume we know what the future holds.

Entrepreneurship

The word “entrepreneurship” is overused, so let’s pause to look at the different concepts and styles of work that fall under this umbrella category.

First, there’s *gig economy* work, like driving for DoorDash or Uber Eats. It’ll get cash in your pocket immediately, but because there are low barriers to entry and few ways to distinguish yourself, the upside is limited.

Next, there are *scalable* side hustles, like building an online business of your own: freelancing, consulting, producing a product or service that carries your own branding. This allows you to distinguish yourself and offers the benefit of a limited startup cost, but it could take months before it turns profitable.

Once you convert side hustles into full-time work, there are two iterations.

There’s self-employment, in which you’re a solo service provider (potentially with a few 1099 contractors).

And then there’s full-blown entrepreneurship, in which you’re running a company with W2 employees, health benefits, vacation policies and a 401k plan.

The confusing thing about the catch-all term “entrepreneurship” is that people online use this to apply to all four of the above-listed situations, and as a result, most information that you’ll find about this topic is muddled.

In this First Principles series, I’ll be clear about which of these four situations I’m referencing, as I write about how to think and act like a successful entrepreneur.

Hope you enjoyed AND learned from this inaugural post in the First Principles series.

Click here if you want future posts like this straight to your inbox with more thoughts, ideas and insights on a new take on FIRE.

See you soon!

Source: affordanything.com

Apache is functioning normally

May 24, 2023 by Brett Tams

In Best Low-Risk Investments for 2023, I provided a comprehensive list of low-risk investments with predictable returns. But it’s precisely because those returns are low-risk that they also provide relatively low returns.

In this article, we’re going to look at high-yield investments, many of which involve a higher degree of risk but are also likely to provide higher returns.

True enough, low-risk investments are the right investment solution for anyone who’s looking to preserve capital and still earn some income.

But if you’re more interested in the income side of an investment, accepting a bit of risk can produce significantly higher returns. And at the same time, these investments will generally be less risky than growth stocks and other high-risk/high-reward investments.

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Determine How Much Risk You’re Willing to Take On

The risk we’re talking about with these high-yield investments is the potential for you to lose money. As is true when investing in any asset, you need to begin by determining how much you’re willing to risk in the pursuit of higher returns.

Chasing “high-yield returns” will make you broke if you don’t have clear financial goals you’re working towards.

I’m going to present a large number of high-yield investments, each with its own degree of risk. The purpose is to help you evaluate the risk/reward potential of these investments when selecting the ones that will be right for you.

If you’re looking for investments that are completely safe, you should favor one or more of the highly liquid, low-yield vehicles covered in Best Low-Risk Investments for 2023. In this article, we’re going to be going for something a little bit different. As such, please note that this is not in any way a blanket recommendation of any particular investment.

Best High-Yield Investments for 2023

1. Treasury Inflation-Protected Securities (TIPS)

Let’s start with this one, if only because it’s on just about every list of high-yield investments, especially in the current environment of rising inflation. It may not actually be the best high-yield investment, but it does have its virtues and shouldn’t be overlooked.

Basically, TIPS are securities issued by the U.S. Treasury that are designed to accommodate inflation. They do pay regular interest, though it’s typically lower than the rate paid on ordinary Treasury securities of similar terms. The bonds are available with a minimum investment of $100, in terms of five, 10, and 30 years. And since they’re fully backed by the U.S. government, you are assured of receiving the full principal value if you hold a security until maturity.

But the real benefit—and the primary advantage—of these securities is the inflation principal additions. Each year, the Treasury will add an amount to the bond principal that’s commensurate with changes in the Consumer Price Index (CPI).

Fortunately, while the principal will be added when the CPI rises (as it nearly always does), none will be deducted if the index goes negative.

You can purchase TIPS through the U.S. Treasury’s investment portal, Treasury Direct. You can also hold the securities as well as redeem them on the same platform. There are no commissions or fees when buying securities.

On the downside, TIPS are purely a play on inflation since the base rates are fairly low. And while the principal additions will keep you even with inflation, you should know that they are taxable in the year received.

Still, TIPS are an excellent low-risk, high-yield investment during times of rising inflation—like now.

2. I Bonds

If you’re looking for a true low-risk, high-yield investment, look no further than Series I bonds. With the current surge in inflation, these bonds have become incredibly popular, though they are limited.

I bonds are currently paying 6.89%. They can be purchased electronically in denominations as little as $25. However, you are limited to purchasing no more than $10,000 in I bonds per calendar year. Since they are issued by the U.S. Treasury, they’re fully protected by the U.S. government. You can purchase them through the Treasury Department’s investment portal, TreasuryDirect.gov.

“The cash in my savings account is on fire,” groans Scott Lieberman, Founder of Touchdown Money. “Inflation has my money in flames, each month incinerating more and more. To defend against this, I purchased an I bond. When I decide to get my money back, the I bond will have been protected against inflation by being worth more than what I bought it for. I highly recommend getting yourself a super safe Series I bond with money you can stash away for at least one year.”

You may not be able to put your entire bond portfolio into Series I bonds. But just a small investment, at nearly 10%, can increase the overall return on your bond allocation.

3. Corporate Bonds

The average rate of return on a bank savings account is 0.33%. The average rate on a money market account is 0.09%, and 0.25% on a 12-month CD.

Now, there are some banks paying higher rates, but generally only in the 1%-plus range.

If you want higher returns on your fixed income portfolio, and you’re willing to accept a moderate level of risk, you can invest in corporate bonds. Not only do they pay higher rates than banks, but you can lock in those higher rates for many years.

For example, the average current yield on a AAA-rated corporate bond is 4.55%. Now that’s the rate for AAA bonds, which are the highest-rated securities. You can get even higher rates on bonds with lower ratings, which we will cover in the next section.

Corporate bonds sell in face amounts of $1,000, though the price may be higher or lower depending on where interest rates are. If you choose to buy individual corporate bonds, expect to buy them in lots of ten. That means you’ll likely need to invest $10,000 in a single issue. Brokers will typically charge a small per-bond fee on purchase and sale.

An alternative may be to take advantage of corporate bond funds. That will give you an opportunity to invest in a portfolio of bonds for as little as the price of one share of an ETF. And because they are ETFs, they can usually be bought and sold commission free.

You can typically purchase corporate bonds and bond funds through popular stock brokers, like Zacks Trade, TD Ameritrade.

Corporate Bond Risk

Be aware that the value of corporate bonds, particularly those with maturities greater than 10 years, can fall if interest rates rise. Conversely, the value of the bonds can rise if interest rates fall.

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4. High-Yield Bonds

In the previous section we talked about how interest rates on corporate bonds vary based on each bond issue’s rating. A AAA bond, being the safest, has the lowest yield. But a riskier bond, such as one rated BBB, will provide a higher rate of return.

If you’re looking to earn higher interest than you can with investment-grade corporate bonds, you can get those returns with so-called high-yield bonds. Because they have a lower rating, they pay higher interest, sometimes much higher.

The average yield on high-yield bonds is 8.29%. But that’s just an average. The yield on a bond rated B will be higher than one rated BB.

You should also be aware that, in addition to potential market value declines due to rising interest rates, high-yield bonds are more likely to default than investment-grade bonds. That’s why they pay higher interest rates. (They used to call these bonds “junk bonds,” but that kind of description is a marketing disaster.) Because of those twin risks, junk bonds should occupy only a small corner of your fixed-income portfolio.

High Yield Bond Risk

In a rapidly rising interest rate environment, high-yield bonds are more likely to default.

High-yield bonds can be purchased under similar terms and in the same places where you can trade corporate bonds. There are also ETFs that specialize in high-yield bonds and will be a better choice for most investors, since they will include diversification across many different bond issues.

5. Municipal Bonds

Just as corporations and the U.S. Treasury issue bonds, so do state and local governments. These are referred to as municipal bonds. They work much like other bond types, particularly corporates. They can be purchased in similar denominations through online brokers.

The main advantage enjoyed by municipal bonds is their tax-exempt status for federal income tax purposes. And if you purchase a municipal bond issued by your home state, or a municipality within that state, the interest will also be tax-exempt for state income tax purposes.

That makes municipal bonds an excellent source of tax-exempt income in a nonretirement account. (Because retirement accounts are tax-sheltered, it makes little sense to include municipal bonds in those accounts.)

Municipal bond rates are currently hovering just above 3% for AAA-rated bonds. And while that’s an impressive return by itself, it masks an even higher yield.

Because of their tax-exempt status, the effective yield on municipal bonds will be higher than the note rate. For example, if your combined federal and state marginal income tax rates are 25%, the effective yield on a municipal bond paying 3% will be 4%. That gives an effective rate comparable with AAA-rated corporate bonds.

Municipal bonds, like other bonds, are subject to market value fluctuations due to interest rate changes. And while it’s rare, there have been occasional defaults on these bonds.

Like corporate bonds, municipal bonds carry ratings that affect the interest rates they pay. You can investigate bond ratings through sources like Standard & Poor’s, Moody’s, and Fitch.

Fund	Symbol	Type	Current Yield	5 Average Annual Return
Vanguard Inflation-Protected Securities Fund	VIPSX	TIPS	0.06%	3.02%
SPDR® Portfolio Interm Term Corp Bond ETF	SPIB	Corporate	4.38%	1.44%
iShares Interest Rate Hedged High Yield Bond ETF	HYGH	High-Yield	5.19%	2.02%
Invesco VRDO Tax-Free ETF (PVI)	PVI	Municipal	0.53%	0.56%

6. Longer Term Certificates of Deposit (CDs)

This is another investment that falls under the low risk/relatively high return classification. As interest rates have risen in recent months, rates have crept up on certificates of deposit. Unlike just one year ago, CDs now merit consideration.

But the key is to invest in certificates with longer terms.

“Another lower-risk option is to consider a Certificate of Deposit (CD),” advises Lance C. Steiner, CFP at Buckingham Advisors. “Banks, credit unions, and many other financial institutions offer CDs with maturities ranging from 6 months to 60 months. Currently, a 6-month CD may pay between 0.75% and 1.25% where a 24-month CD may pay between 2.20% and 3.00%. We suggest considering a short-term ladder since interest rates are expected to continue rising.” (Stated interest rates for the high-yield savings and CDs were obtained at bankrate.com.)

Most banks offer certificates of deposit with terms as long as five years. Those typically have the highest yields.

But the longer term does involve at least a moderate level of risk. If you invest in a CD for five years that’s currently paying 3%, the risk is that interest rates will continue rising. If they do, you’ll miss out on the higher returns available on newer certificates. But the risk is still low overall since the bank guarantees to repay 100% of your principle upon certificate maturity.

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7. Peer-to-Peer (P2P) Lending

Do you know how banks borrow from you—at 1% interest—then loan the same money to your neighbor at rates sometimes as high as 20%? It’s quite a racket, and a profitable one at that.

But do you also know that you have the same opportunity as a bank? It’s an investing process known as peer-to-peer lending, or P2P for short.

P2P lending essentially eliminates the bank. As an investor, you’ll provide the funds for borrowers on a P2P platform. Most of these loans will be in the form of personal loans for a variety of purposes. But some can also be business loans, medical loans, and for other more specific purposes.

As an investor/lender, you get to keep more of the interest rate return on those loans. You can invest easily through online P2P platforms.

One popular example is Prosper. They offer primarily personal loans in amounts ranging between $2,000 and $40,000. You can invest in small slivers of these loans, referred to as “notes.” Notes can be purchased for as little as $25.

That small denomination will make it possible to diversify your investment across many different loans. You can even choose the loans you will invest in based on borrower credit scores, income, loan terms, and purposes.

Prosper, which has managed $20 billion in P2P loans since 2005, claims a historical average return of 5.7%. That’s a high rate of return on what is essentially a fixed-income investment. But that’s because there exists the possibility of loss due to borrower default.

However, you can minimize the likelihood of default by carefully choosing borrower loan quality. That means focusing on borrowers with higher credit scores, incomes, and more conservative loan purposes (like debt consolidation).

8. Real Estate Investment Trusts (REITs)

REITs are an excellent way to participate in real estate investment, and the return it provides, without large amounts of capital or the need to manage properties. They’re publicly traded, closed-end investment funds that can be bought and sold on major stock exchanges. They invest primarily in commercial real estate, like office buildings, retail space, and large apartment complexes.

If you’re planning to invest in a REIT, you should be aware that there are three different types.

“Equity REITs purchase commercial, industrial, or residential real estate properties,” reports Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University and co-author of several books, including The Tools and Techniques Of Investment Planning, Strategic Value Investing and Investment Banking for Dummies. “Income is derived primarily from the rental on the properties, as well as from the sale of properties that have increased in value. Mortgage REITs invest in property mortgages. The income is primarily from the interest they earn on the mortgage loans. Hybrid REITs invest both directly in property and in mortgages on properties.”

Johnson also cautions:

“Investors should understand that equity REITs are more like stocks and mortgage REITs are more like bonds. Hybrid REITs are like a mix of stocks and bonds.”

Mortgage REITs, in particular, are an excellent way to earn steady dividend income without being closely tied to the stock market.

Examples of specific REITs are listed in the table below (source: Kiplinger):

REIT	Equity or Mortgage	Property Type	Dividend Yield	12 Month Return
Rexford Industrial Realty	REXR	Industrial warehouse space	2.02%	2.21%
Sun Communities	SUI	Manufactured housing, RVs, resorts, marinas	2.19%	-14.71%
American Tower	AMT	Multi-tenant cell towers	2.13%	-9.00%
Prologis	PLD	Industrial real estate	2.49%	-0.77%
Camden Property Trust	CPT	Apartment complexes	2.77%	-7.74%
Alexandria Real Estate Equities	ARE	Research Properties	3.14%	-23.72%
Digital Realty Trust	DLR	Data centers	3.83%	-17.72%

9. Real Estate Crowdfunding

If you prefer direct investment in a property of your choice, rather than a portfolio, you can invest in real estate crowdfunding. You invest your money, but management of the property will be handled by professionals. With real estate crowdfunding, you can pick out individual properties, or invest in nonpublic REITs that invest in very specific portfolios.

One of the best examples of real estate crowdfunding is Fundrise. That’s because you can invest with as little as $500 or create a customized portfolio with no more than $1,000. Not only does Fundrise charge low fees, but they also have multiple investment options. You can start small in managed investments, and eventually trade up to investing in individual deals.

One thing to be aware of with real estate crowdfunding is that many require accredited investor status. That means being high income, high net worth, or both. If you are an accredited investor, you’ll have many more choices in the real estate crowdfunding space.

If you are not an accredited investor, that doesn’t mean you’ll be prevented from investing in this asset class. Part of the reason why Fundrise is so popular is that they don’t require accredited investor status. There are other real estate crowdfunding platforms that do the same.

Just be careful if you want to invest in real estate through real estate crowdfunding platforms. You will be expected to tie your money up for several years, and early redemption is often not possible. And like most investments, there is the possibility of losing some or all your investment principal.

Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency

10. Physical Real Estate

We’ve talked about investing in real estate through REITs and real estate crowdfunding. But you can also invest directly in physical property, including residential property or even commercial.

Owning real estate outright means you have complete control over the investment. And since real estate is a large-dollar investment, the potential returns are also large.

For starters, average annual returns on real estate are impressive. They’re even comparable to stocks. Residential real estate has generated average returns of 10.6%, while commercial property has returned an average of 9.5%.

Next, real estate has the potential to generate income from two directions, from rental income and capital gains. But because of high property values in many markets around the country, it will be difficult to purchase real estate that will produce a positive cash flow, at least in the first few years.

Generally speaking, capital gains are where the richest returns come from. Property purchased today could double or even triple in 20 years, creating a huge windfall. And this will be a long-term capital gain, to get the benefit of a lower tax bite.

Finally, there’s the leverage factor. You can typically purchase an investment property with a 20% down payment. That means you can purchase a $500,000 property with $100,000 out-of-pocket.

By calculating your capital gains on your upfront investment, the returns are truly staggering. If the $500,000 property doubles to $1 million in 20 years, the $500,000 profit generated will produce a 500% gain on your $100,000 investment.

On the negative side, real estate is certainly a very long-term investment. It also comes with high transaction fees, often as high as 10% of the sale price. And not only will it require a large down payment up front, but also substantial investment of time managing the property.

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11. High Dividend Stocks

“The best high-yield investment is dividend stocks,” declares Harry Turner, Founder at The Sovereign Investor. “While there is no guaranteed return with stocks, over the long term stocks have outperformed other investments such as bonds and real estate. Among stocks, dividend-paying stocks have outperformed non-dividend paying stocks by more than 2 percentage points per year on average over the last century. In addition, dividend stocks tend to be less volatile than non-dividend paying stocks, meaning they are less likely to lose value in downturns.”

You can certainly invest in individual stocks that pay high dividends. But a less risky way to do it, and one that will avoid individual stock selection, is to invest through a fund.

One of the most popular is the ProShares S&P 500 Dividend Aristocrat ETF (NOBL). It has provided a return of 1.67% in the 12 months ending May 31, and an average of 12.33% per year since the fund began in October 2013. The fund currently has a 1.92% dividend yield.

The so-called Dividend Aristocrats are popular because they represent 60+ S&P 500 companies, with a history of increasing their dividends for at least the past 25 years.

“Dividend Stocks are an excellent way to earn some quality yield on your investments while simultaneously keeping inflation at bay,” advises Lyle Solomon, Principal Attorney at Oak View Law Group, one of the largest law firms in America. “Dividends are usually paid out by well-established and successful companies that no longer need to reinvest all of the profits back into the business.”

It gets better. “These companies and their stocks are safer to invest in owing to their stature, large customer base, and hold over the markets,” adds Solomon. “The best part about dividend stocks is that many of these companies increase dividends year on year.”

The table below shows some popular dividend-paying stocks. Each is a so-called “Dividend Aristocrat”, which means it’s part of the S&P 500 and has increased its dividend in each of at least the past 25 years.

Company	Symbol	Dividend	Dividend Yield
AbbVie	ABBV	$5.64	3.80%
Armcor PLC	AMCR	$0.48	3.81%
Chevron	CVX	$5.68	3.94%
ExxonMobil	XOM	$3.52	4.04%
IBM	IBM	$6.60	5.15%
Realty Income Corp	O	$2.97	4.16%
Walgreen Boots Alliance	WBA	$1.92	4.97%

12. Preferred Stocks

Preferred stocks are a very specific type of dividend stock. Just like common stock, preferred stock represents an interest in a publicly traded company. They’re often thought of as something of a hybrid between stocks and bonds because they contain elements of both.

Though common stocks can pay dividends, they don’t always. Preferred stocks on the other hand, always pay dividends. Those dividends can be either a fixed amount or based on a variable dividend formula. For example, a company can base the dividend payout on a recognized index, like the LIBOR (London Inter-Bank Offered Rate). The percentage of dividend payout will then change as the index rate does.

Preferred stocks have two major advantages over common stock. First, as “preferred” securities, they have a priority on dividend payments. A company is required to pay their preferred shareholders dividends ahead of common stockholders. Second, preferred stocks have higher dividend yields than common stocks in the same company.

You can purchase preferred stock through online brokers, some of which are listed under “Growth Stocks” below.

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Preferred Stock Caveats

The disadvantage of preferred stocks is that they don’t entitle the holder to vote in corporate elections. But some preferred stocks offer a conversion option. You can exchange your preferred shares for a specific number of common stock shares in the company. Since the conversion will likely be exercised when the price of the common shares takes a big jump, there’s the potential for large capital gains—in addition to the higher dividend.

Be aware that preferred stocks can also be callable. That means the company can authorize the repurchase of the stock at its discretion. Most will likely do that at a time when interest rates are falling, and they no longer want to pay a higher dividend on the preferred stock.

Preferred stock may also have a maturity date, which is typically 30–40 years after its original issuance. The company will typically redeem the shares at the original issue price, eliminating the possibility of capital gains.

Not all companies issue preferred stock. If you choose this investment, be sure it’s with a company that’s well-established and has strong financials. You should also pay close attention to the details of the issuance, including and especially any callability provisions, dividend formulas, and maturity dates.

13. Growth Stocks

This sector is likely the highest risk investment on this list. But it also may be the one with the highest yield, at least over the long term. That’s why we’re including it on this list.

Based on the S&P 500 index, stocks have returned an average of 10% per year for the past 50 years. But it is important to realize that’s only an average. The market may rise 40% one year, then fall 20% the next. To be successful with this investment, you must be committed for the long haul, up to and including several decades.

And because of the potential wide swings, growth stocks are not recommended for funds that will be needed within the next few years. In general, growth stocks work best for retirement plans. That’s where they’ll have the necessary decades to build and compound.

Since most of the return on growth stocks is from capital gains, you’ll get the benefit of lower long-term capital gains tax rates, at least with securities held in a taxable account. (The better news is capital gains on investments held in retirement accounts are tax-deferred until retirement.)

You can choose to invest in individual stocks, but that’s a fairly high-maintenance undertaking. A better way may be to simply invest in ETFs tied to popular indexes. For example, ETFs based on the S&P 500 are very popular among investors.

You can purchase growth stocks and growth stock ETFs commission free with brokers like M1 Finance, Zacks Trade, Wealthsimple.

14. Annuities

Annuities are something like creating your own private pension. It’s an investment contract you take with an insurance company, in which you invest a certain amount of money in exchange for a specific income stream. They can be an excellent source of high yields because the return is locked in by the contract.

Annuities come in many different varieties. Two major classifications are immediate and deferred annuities. As the name implies, immediate annuities begin paying an income stream shortly after the contract begins.

Deferred annuities work something like retirement plans. You may deposit a fixed amount of money with the insurance company upfront or make regular installments. In either case, income payments will begin at a specified point in the future.

With deferred annuities, the income earned within the plan is tax-deferred and paid upon withdrawal. But unlike retirement accounts, annuity contributions are not tax-deductible. Investment returns can either be fixed-rate or variable-rate, depending on the specific annuity setup.

While annuities are an excellent idea and concept, the wide variety of plans as well as the many insurance companies and agents offering them, make them a potential minefield. For example, many annuities are riddled with high fees and are subject to limited withdrawal options.

Because they contain so many moving parts, any annuity contracts you plan to enter into should be carefully reviewed. Pay close attention to all the details, including the small ones. It is, after all, a contract, and therefore legally binding. For that reason, you may want to have a potential annuity reviewed by an attorney before finalizing the deal.

15. Alternative Investments

Alternative investments cover a lot of territory. Examples include precious metals, commodities, private equity, art and collectibles, and digital assets. These fall more in the category of high risk/potential high reward, and you should proceed very carefully and with only the smallest slice of your portfolio.

To simplify the process of selecting alternative assets, you can invest through platforms such as Yieldstreet. With a single cash investment, you can invest in multiple alternatives.

“Investors can purchase real estate directly on Yieldstreet, through fractionalized investments in single deals,” offers Milind Mehere, Founder & Chief Executive Officer at Yieldstreet. “Investors can access private equity and private credit at high minimums by investing in a private market fund (think Blackstone or KKR, for instance). On Yieldstreet, they can have access to third-party funds at a fraction of the previously required minimums. Yieldstreet also offers venture capital (fractionalized) exposure directly. Buying a piece of blue-chip art can be expensive, and prohibitive for most investors, which is why Yieldstreet offers fractionalized assets to diversified art portfolios.”

Yieldstreet also provides access to digital asset investments, with the benefit of allocating to established professional funds, such as Pantera or Osprey Fund. The platform does not currently offer commodities but plans to do so in the future.

Access to wide array of alternative asset classes
Access to ultra-wealthy investments
Can invest for income or growth

Learn More Now

Alternative investments largely require thinking out-of-the-box. Some of the best investment opportunities are also the most unusual.

“The price of meat continues to rise, while agriculture remains a recession-proof investment as consumer demand for food is largely inelastic,” reports Chris Rawley, CEO of Harvest Returns, a platform for investing in private agriculture companies. “Consequently, investors are seeing solid returns from high-yield, grass-fed cattle notes.”

16. Interest Bearing Crypto Accounts

Though the primary appeal of investing in cryptocurrency has been the meteoric rises in price, now that the trend seems to be in reverse, the better play may be in interest-bearing crypto accounts. A select group of crypto exchanges pays high interest on your crypto balance.

One example is Gemini. Not only do they provide an opportunity to buy, sell, and store more than 100 cryptocurrencies—plus non-fungible tokens (NFTs)—but they are currently paying 8.05% APY on your crypto balance through Gemini Earn.

In another variation of being able to earn money on crypto, Crypto.com pays rewards of up to 14.5% on crypto held on the platform. That’s the maximum rate, as rewards vary by crypto. For example, rewards on Bitcoin and Ethereum are paid at 6%, while stablecoins can earn 8.5%.

It’s important to be aware that when investing in cryptocurrency, you will not enjoy the benefit of FDIC insurance. That means you can lose money on your investment. But that’s why crypto exchanges pay such high rates of return, whether it’s in the form of interest or rewards.

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17. Crypto Staking

Another way to play cryptocurrency is a process known as crypto staking. This is where the crypto exchange pays you a certain percentage as compensation or rewards for monitoring a specific cryptocurrency. This is not like crypto mining, which brings crypto into existence. Instead, you’ll participate in writing that particular blockchain and monitoring its security.

“Crypto staking is a concept wherein you can buy and lock a cryptocurrency in a protocol, and you will earn rewards for the amount and time you have locked the cryptocurrency,” reports Oak View Law Group’s Lyle Solomon.

“The big downside to staking crypto is the value of cryptocurrencies, in general, is extremely volatile, and the value of your staked crypto may reduce drastically,” Solomon continues, “However, you can stake stable currencies like USDC, which have their value pegged to the U.S. dollar, and would imply you earn staked rewards without a massive decrease in the value of your investment.”

Much like earning interest and rewards on crypto, staking takes place on crypto exchanges. Two exchanges that feature staking include Coinbase and Kraken. These are two of the largest crypto exchanges in the industry, and they provide a wide range of crypto opportunities, in addition to staking.

Invest in Startup Businesses and Companies

Have you ever heard the term “angel investor”? That’s a private investor, usually, a high net worth individual, who provides capital to small businesses, often startups. That capital is in the form of equity. The angel investor invests money in a small business, becomes a part owner of the company, and is entitled to a share of the company’s earnings.

In most cases, the angel investor acts as a silent partner. That means he or she receives dividend distributions on the equity invested but doesn’t actually get involved in the management of the company.

It’s a potentially lucrative investment opportunity because small businesses have a way of becoming big businesses. As they grow, both your equity and your income from the business also grow. And if the business ever goes public, you could be looking at a life-changing windfall!

Easy Ways to Invest in Startup Businesses

Mainvest is a simple, easy way to invest in small businesses. It’s an online investment platform where you can get access to returns as high as 25%, with an investment of just $100. Mainvest offers vetted businesses (the acceptance rate is just 5% of business that apply) for you to invest in.

It collects revenue, which will be paid to you quarterly. And because the minimum required investment is so small, you can invest in several small businesses at the same time. One of the big advantages with Mainvest is that you are not required to be an accredited investor.

Still another opportunity is through Fundrise Innovation Fund. I’ve already covered how Fundrise is an excellent real estate crowdfunding platform. But through their recently launched Innovaton Fund, you’ll have opportunity to invest in high-growth private technology companies. As a fund, you’ll invest in a portfolio of late-stage tech companies, as well as some public equities.

The purpose of the fund is to provide high growth, and the fund is currently offering shares with a net asset value of $10. These are long-term investments, so you should expect to remain invested for at least five years. But you may receive dividends in the meantime.

Like Mainvest, the Fundrise Innovation Fund does not require you to be an accredited investor.

Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency

Final Thoughts on High Yield Investing

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Notice that I’ve included a mix of investments based on a combination of risk and return. The greater the risk associated with the investment, the higher the stated or expected return will be.

It’s important when choosing any of these investments that you thoroughly assess the risk involved with each, and not focus primarily on return. These are not 100% safe investments, like short-term CDs, short-term Treasury securities, savings accounts, or bank money market accounts.

Because there is risk associated with each, most are not suitable as short-term investments. They make most sense for long-term investment accounts, particularly retirement accounts.

For example, growth stocks—and most stocks, for that matter—should generally be in a retirement account. While there will be years when you will suffer losses in your position, you’ll have enough years to offset those losses between now and retirement.

Also, if you don’t understand any of the above investments, it will be best to avoid making them. And for more complicated investments, like annuities, you should consult with a professional to evaluate the suitability and all the provisions it contains.

FAQ’s on High Yield Investment Options

What investment has the highest yield?

The investment with the highest yield will vary depending on a number of factors, including current market conditions and the amount of risk an investor is willing to take on. Generally speaking, investments with the potential for high yields also come with a higher level of risk, so it’s important for investors to carefully consider their options and choose investments that align with their financial goals and risk tolerance.

Some examples of high-yield investments include:

1. Stocks: Some stocks may offer high dividend yields, which is the annual dividend payment a company makes to its shareholders, expressed as a percentage of the stock’s current market price.

2. Real estate: Investing in real estate, either directly by purchasing property or indirectly through a real estate investment trust (REIT), can potentially generate high returns in the form of rental income and appreciation of the property value.

3. High-yield bonds: High-yield bonds, also known as junk bonds, are bonds that are issued by companies with lower credit ratings and thus offer higher yields to compensate for the added risk.

4. Private lending: Investing in private loans, such as through peer-to-peer lending platforms, can potentially offer high yields, but it also carries a higher level of risk.

5. Commodities: Investing in commodities, such as precious metals or oil, can potentially generate high returns if the prices of those commodities rise. However, the prices of commodities can also be volatile and subject to market fluctuations.

It’s important to note that these are just examples and not recommendations. As with any investment, it’s crucial to carefully research and consider all the potential risks and rewards before making a decision.

Where can I invest my money to get high returns?

There are a number of places you can invest your money to get high returns. One option is to invest in stocks, which typically offer higher returns than other investment options. Another option is to invest in bonds, which are considered a relatively safe investment option.

You could also invest in real estate, which has the potential to provide high returns if done correctly. Finally, you could also invest in commodities, such as gold or silver, which can be a risky investment but can also offer high returns.

What investments can I make a 10% return?

It’s difficult to predict exactly what investments will generate a 10% return, as investment returns can vary depending on a number of factors, including market conditions and the performance of the specific investment. Some investments, such as stocks and real estate, have the potential to generate returns in excess of 10%, but they also come with a higher level of risk. It’s important to remember that past performance is not necessarily indicative of future results, and that all investments carry some degree of risk

Source: goodfinancialcents.com

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May 24, 2023 by Brett Tams

How to Invest in Storage Units

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Real estate offers myriad investment choices, from single-family homes to data centers. The ideal asset for you depends on factors such as your investment size and strategy. Over the past several decades, investors have diversified their portfolios by capitalizing on emerging market opportunities like self-storage.

Self-storage facilities serve as secure storage solutions for individuals and businesses, accommodating various products, materials and more. Given the high demand for spaces to store household belongings and business equipment, self-storage facilities have become indispensable nationwide.

For help figuring out your personal investing strategy, consider working with a financial advisor.

Self-Storage Investing Basics

Self-storage investing means investing in storage units that individuals and businesses use to stow their spare belongings and assets. For example, a homeowner might need room for seasonal lawn equipment. For businesses, storage units can be used for surplus inventory instead of throwing it away. In either case, they’ll pay a storage facility a monthly fee to place their items in a secure unit. As an investor, you can own and operate a storage facility or purchase shares in a facility.

Self-storage is a solid investment for several reasons investors find attractive. First, the asset has high earning potential. Storage units cost less than residential real estate and other forms of commercial buildings, meaning more money in your pocket. For example, IBISWorld reported that the profit margin for storage units is 41%. In addition, storage revenue has increased by 2.1% over the past five years, making the industry worth over $29 billion.

Second, demand for self-storage continues to grow as baby boomers downsize and businesses shrink their workspaces.

Resultingly, the risk of investing in self-storage is low because of high profit margins and continuous demand. Customers need storage whether the economy is strong or a market downturn occurs. Therefore, the industry is a viable way to diversify your portfolio.

The Self-Storage Market

Here’s how the self-storage business works: the storage property owner (you) charges customers to use the space for storing their belongings. These storage spaces are available for rent every month and come in different sizes according to the customers’ needs.

The specific type of storage unit you will promote depends on your client base. For example, if your ideal customers are sports enthusiasts, they may prefer padding, shelving and slat walls to store their equipment. On the other hand, a family moving across town might only need a bare unit to store their belongings temporarily. Therefore, understanding your target customers is vital in determining the type of units you purchase or build.

In addition, the lease contract terms are the backbone of the business, and you can adjust them monthly. This feature allows you to adjust prices from one month to another, unlike traditional real estate contracts, which do not apply to the self-storage market. As a result, you can change with the market and cater to your customers’ needs.

Fortunately, investors of all scopes and financial backgrounds can invest in storage units. For example, suppose you want to experiment with a modest investment in the self-storage industry. In that case, you can purchase shares in self-storage facilities. So, you can actively invest in self-storage (through ownership of a facility) or take the route of less commitment and risk through passive investment (shares in a company).

Types of Self-Storage Facilities

Self-storage facilities can be classified based on their purpose and capacity. Each type of facility has its advantages and disadvantages.

Climate-Controlled Storage

Certain items and materials are susceptible to damage from heat, cold or extreme humidity. For example, art, furniture and musical instruments benefit from climate control. To safeguard these items, climate-controlled storage units are available.

As a result, a regulated environment and security are top priorities when storing fragile possessions. Because climate-controlled storage units cater to various market needs, they are more expensive, and investors can charge higher prices for their specialized services.

Drive-Up & Outdoor Storage

Outdoor or drive-up storage is the most widespread type. It consists of rows of units resembling garages. By pulling up the door, the customer has complete access to their storage unit. These facilities are the most affordable option available.

One of the benefits of outdoor storage facilities is that they require minimal maintenance and employees. In addition, they are user-friendly, making them popular among individuals needing storage space. Lastly, these storage centers can bolster their security through cameras, electronic gates and security guards.

Mixed-Use Storage

The self-storage industry serves a diverse range of customers with varying needs. To meet these niche demands, many storage facilities combine different services, resulting in mixed-use storage facilities.

A significant advantage of mixed-use storage facilities is the ability to cater to various needs. For example, a self-storage facility strategically located in an urban setting can help nearby residents with extra belongings while serving local businesses. As a result, mixed-use storage facilities are flexible assets, offering solutions to a wide customer base.

Vehicle Storage

Self-storage facilities also help customers with vehicles such as cars, boats or RVs. Vehicle storage is an ideal solution for those seeking a sheltered, locked parking spot.

Vehicle storage often offers additional services, such as temperature-controlled units to ensure the preservation of classic cars. As a result, customers turn to these facilities annually to protect their vehicles, especially near high-demand spots such as airports and harbors.

How to Invest In Self-Storage

There are four primary ways you can get involved in a self-storage venture:

1. Purchase Shares in a Real Estate Investment Trust (REIT)

If you aren’t comfortable owning and operating an entire facility, you can invest in a real estate investment trust (REIT) instead. These companies spread investors’ money across various sectors and can have a particular focus. So, finding a REIT specializing in storage units can give you exposure to this profitable industry.

2. Invest in a Publicly Traded Storage Business

Similarly, you can buy shares in corporate storage companies on the stock market. If the company does well and the stock price increases, you can sell your shares for a profit.

3. Buy an Existing Facility

You can get more involved by purchasing a self-storage facility of your own. This option means running the business (or hiring workers to do so) and collecting monthly payments from your customers. As a result, you have higher earning potential than investing in a REIT.

4. Develop Your Own Facility

If there aren’t any facilities for sale near you, building one yourself is another option. Remember, you must purchase a suitable plot of land and manage the facility’s construction. While doing so takes additional time and money, it’s a way into owning a storage facility and enjoying the profits.

Drawbacks of Investing in Self Storage

Despite the advantages of investing in self-storage, it’s essential to understand the potential challenges in this type of venture. Depending on your business model, financial circumstances and location, you’ll face different obstacles. Fortunately, you can adjust your approach as needed to overcome such hurdles.

First, clients can be demanding, requiring a composed demeanor and a focused strategy. For instance, a customer who just lost their job and housing can come in, desperate for help and lacking the resources for a monthly payment. As the owner, you’ll have to decide how to go about the situation and risk losing money.

Furthermore, when competing against rivals who offer affordable storage spaces in prime locations like the city center, it’s best to research the local market. Then, you can evaluate your position compared to the competition and modify your approach to enhance your business.

Is Investing in Self-Storage Right For You?

With all the preceding information in mind, you can decide how self-storage would fit into your portfolio. If you’re interested in real estate, self-storage is an excellent method because it is less expensive than typical commercial real estate. In addition, it requires less upkeep than residential buildings and can provide a steady cash flow every month.

Remember, a lump sum (usually tens or hundreds of thousands of dollars) is needed up front to invest in self-storage. You’ll purchase partial or full ownership of a facility or construct a facility from scratch. So, you must save up the required money or borrow it from a lender. Either way, these startup costs can be prohibitive to investors without the cash.

Lastly, you can take a less intense approach by investing in a REIT. If you like the self-storage business but don’t want to run a company, you can still enjoy the industry’s robust profit margin by putting money into shares in a self-storage business.

The Bottom Line

Investing in self-storage means purchasing a business or shares in a business that protects people’s possessions. Because this industry has a low overhead and charges monthly rent, investors can make substantial gains. To get a foothold in the business, you’ll need to select which type of storage you want to invest in, analyze your local market and find a need unmet by the competition. On the other hand, a self-storage REIT is a solid choice for those who prefer a less hands-on approach.

Tips for Investing in Storage Units

Self-storage units are excellent assets for a financial plan. However, it can be challenging to know how much cash to allocate toward it versus your other investments and priorities. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Self-storage is just one method for real estate investing. To explore the topic more deeply, here are three more ways to add real estate to your portfolio.

Photo credit: ©iStock.com/AJ_Watt, ©iStock.com/onurdongel, ©iStock.com/rzelich

Ashley Kilroy
Ashley Chorpenning is an experienced financial writer currently serving as an investment and insurance expert at SmartAsset. In addition to being a contributing writer at SmartAsset, she writes for solo entrepreneurs as well as for Fortune 500 companies. Ashley is a finance graduate of the University of Cincinnati. When she isn’t helping people understand their finances, you may find Ashley cage diving with great whites or on safari in South Africa.

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Source: smartasset.com

Apache is functioning normally

May 23, 2023 by Brett Tams

My monthly Extraordinary Lives series is something that I’m really enjoying doing. First up was JP Livingston, who retired with a net worth over $2,000,000 at the age of 28. Today’s interview is with Tanja Hester, who retired at the end of 2017 at the age of 38.

You probably know her from the amazing blog Our Next Life. Our Next Life is one of my favorite blogs, so I’m glad Tanja said yes to this interview!

In this interview, you’ll learn:

How she managed to retire so early;
How she still lives comfortably in one of the most beautiful places in the world;
Her advice for retiring early no matter what your career choice is;
How she decided how much she needed to retire on;
The sacrifices she has had to make;

And more! This interview is packed full of valuable information!

I asked you, my readers, what questions I should ask her, so below are your questions (and some of mine) about Tanja’s story and how she has accomplished so much. Make sure you’re following me on Facebook so you have the opportunity to submit your own questions for the next interview.

Related content:

1. Tell me your story. How are you managing to retire so early?

Hi Michelle! Thanks so much for having me. 🙂 We feel like we’re now living a magical life as early retirees, but there’s no magic to how we got here. We spent a lot less than we earned for a bunch of years in a row, made easier and faster by above average salaries (both earned six figures in our last several years of work), and we tried to make some other smart decisions along the way. But we didn’t strike it rich with Bitcoin or build a unicorn startup or get an inheritance or anything else. We just stayed focused on our goal and ground away at it, bit by bit.

More specifically, we focused on three big things:

1. Buying less house than we could afford. The banks would have happily lent us three times as much as we paid for our house in Tahoe, but we stuck to our guns and set our own budget. We lucked out by being able to buy at almost the bottom of the market in 2011, but even though we could have bought more house then for a pretty good price, we kept our budget modest, and that allowed us to pay off our mortgage in just over five years, which then let us save more in our last year of work as well as go into early retirement with no mortgage, which means our basic cost of living is minimal.

2. Paying ourselves first and automating that. We set our paychecks up so that a big chunk went straight into savings without us ever seeing that money, and had another big portion set to go into our investments automatically with each paycheck. We kept only a small portion of our total income in our checking account, and so felt like that was all we had to spend. But more importantly, saving wasn’t a choice we had to make, which would have relied on willpower we don’t always possess. It just happened without us doing anything. For those who aren’t natural savers (like us!), I can’t recommend enough taking the decision out of it and automating your savings.

3. Not inflating our lifestyle. For the last decade of our careers, we banked every bonus and every raise. So at the start of each year, we’d increase our automatic investments by at least as much as our paychecks increased, meaning we never felt like we got a raise, and we didn’t start spending more. When you add the compounding effect of all those raises we banked, it adds up to quite a big number! But for us, because we did it gradually that way and just kept the amount we had to spend steady, it never felt like a sacrifice to save at a really high rate.

2. When did you begin saving for early retirement?

While we’d been saving for years for a string of financial goals – paying off my consumer debt, buying our first place in LA, buying our forever home in Tahoe and saving a bit for traditional retirement – we started saving for early retirement in a focused way about six years ago. And then we got super focused four years ago.

I still can’t believe how much we saved in that time, but it’s amazing what’s possible when you get really clear on your “why” and align all your decisions around it. (And again, having a higher income for sure helped. You can’t save more than you earn, so the more you can earn, the faster you can save.)

3. Was early retirement always something you were striving for? What made you want to retire early?

Mark and I always had a sense that we didn’t want to work “forever,” but we didn’t know what that meant. We had very demanding, high-stress careers where we could never truly be offline. We loved much about the work and loved our clients and colleagues, but it definitely took a big toll on our physical and mental health. And that’s how we knew that we weren’t willing to do that kind of work forever.

We talked about transitioning to different, lower-paid careers, but once we realized that we could work hard for just a few more years and then never need to work again, it was an easy choice to keep going.

Related: What Is Financial Independence, Retire Early? Answers To FAQs About FIRE

4. Would you say that you live comfortably? I ask this because many people assume that early retirees eat a lot of rice and beans!

I mean, I do love rice and beans. 😉 But we only eat rice and beans a few times a month. I would definitely say we live super comfortably! We own a single family home in a crazy beautiful part of the world, we spend money on fresh, healthy, mostly organic food, we ski multiple times a week and we take several international trips per year.

There’s a lot we don’t spend on, of course, and we do have one freakishly frugal habit that shocks a lot of people – keeping our house at a chilly 55 degrees F in the winter – but we think our life is pretty darn luxurious. But we keep it reasonable by ruthlessly cutting out the mindless spending that doesn’t add real value to our lives and focusing our spending only on the things we love to do.

5. What career did you have before you retired? Did that career help you to retire earlier?

We both worked as political and social cause consultants for a long time – 16 years for me and nearly 20 for Mark. We loved doing meaningful work with smart, talented people, but the pace of it was really hard to sustain. We had to travel a ton and be reachable at all times, and that stress was something we carried around with us at all times. But, the upside of high-pressure jobs like that is that they often pay well. So yes, absolutely – having those careers 100% enabled us to retire early!

6. What advice do you have for the average person that doesn’t make six figures a year who wants to retire early? What do you have to say to those who may think that they can never earn as much as you can – can they still retire early too?

While earning more certainly helps speed things along, there’s nothing about the core principle of financial independence – spend less than you earn and save the difference – that requires an especially high income or a job in tech or any other particular factor. (We both went to state schools for college and majored in English and communications, if you’re curious.) If you can afford to save even a little bit of money each month, you can do this, you just might be on a slightly longer timeline. If you make saving for early retirement a priority, you’ll be amazed that it does not take 40 years to save, as many financial experts would have you believe.

My best advice is to be diligent about tracking your spending. Know where every dollar is going, and then then ask yourself which of those dollars brought you real, lasting happiness, not just a momentarily thrill, and which ones didn’t. Then, as much as you can, cut out the spending that doesn’t make you happy. You don’t even have to do it all at one time, but once you start seeing your spending that way – mindless spending that doesn’t add value and mindful spending that makes you happier – it becomes a whole lot easier to save money.

And then don’t just think about the saving side of the equation. Think about the earning side, too. Side hustles are all the rage, and I side hustled for the first 12 years of my career, working a few odd jobs and then teaching yoga and spinning for 10 years. Those jobs definitely helped me earn and save more in my early career years, but eventually having extra commitments held me back in my “real career.” And at that point, I ditched my side hustle and committed myself fully to my main job, working as long and traveling as much as that required. I know that having that real commitment to work paid off in the form of promotions and bonuses, and that wouldn’t have been possible if I’d kept my side hustle.

7. Will you still earn an income in retirement?

Our retirement is funded primarily by selling shares of stock and bond index funds that we bought throughout our savings phase, as well as by collecting rent on the one rental property we have. We created our “magic number” that we needed to save by figuring out what we’d need to have if we never earned another penny, and that’s what we saved. But now that we’re retired, we also realize that of course we’ll still earn money in some form. Retiring early takes a bit of a hustle mindset, and you don’t just stop being a person who hustles when you leave your career.

The good thing is that we can now put that hustle to use toward community service instead of paid work, and if we do take on paid work, we can be super picky and do only work that sounds super fun, that we’d happily do for free. And that extra money we earn can go toward more charitable giving, toward an extra trip overseas, or maybe toward a home project like a kitchen remodel. In the spirit of full transparency, Mark and I are both working a little bit this year, though in total it will only be about 10-20 percent of our time. We didn’t plan to work, but Mark got an offer he couldn’t refuse to work on a passion project, and I got an offer to fulfill a lifetime dream, so we both had an easy time saying yes.

8. How did you decide on how much you needed to retire on?

The starting point for calculating any early retirement number (or traditional retirement number, for that matter) has to be knowing what you spend in a year. Most online retirement calculators base your target number off what you earn, and that’s bananas if you don’t spend everything you make. When we started our planning, the rule of 25X (25 times your annual spending, the inverse of the 4% safe withdrawal rule) wasn’t as widely talked about, and it wouldn’t have worked for us anyway because we wanted to build a two-phase early retirement plan that would let us leave our traditional retirement savings alone (many early retirees convert 401(k) and IRA funds to be able to access them early without penalty, but we don’t want to do this), so that we’d have a big cushion for our later years, especially given all the uncertainty right now around health care, and the high costs even for those on Medicare.

We probably overcomplicated our calculations a bit because we’re both spreadsheet nerds, but the short version is that we calculated that our 401(k)s already had enough in them to support our “phase 2” (basically our traditional retirement, from age 59 ½ onward, after we can access our 401(k) money without having to jump through any hoops), and so we focused on saving an amount in unrestricted, taxable mutual funds that our spreadsheets told us would carry us through the first 18 years (our “phase 1”). We based those projections on extremely conservative market gains – only about percent real returns after inflation – so that we’d be okay even if the markets are flat for many years.

9. What sacrifices or hard decisions did you have to make?

I think the way we did this – focusing mostly on keeping our lifestyle contained as our earnings increased and automating our savings – made it not feel like a sacrifice. We for sure did give some things up like frequent meals out and traveling with a bit less of a budget orientation, but for those things, it was easy to give them up because we knew exactly why we weren’t spending money on them anymore. Having our goals clear in our minds and both being excited about our vision for the future was so motivating that it headed off any potential feeling of sacrifice.

Two of the hardest decisions we made along the way were to alter our plans to be able to help out family members. We hadn’t planned to buy a rental property, but it became clear that a relative with special needs would be helped a lot if we’d buy a property that would meet those needs and rent it to them, and so we adapted our plans to allow for that. And then another relative was about to go to debt collection for some medical debts that weren’t their fault, and we decided to make a personal loan to let that person move forward financially. Both decisions have worked out super well, and we believe strongly that there’s no point in having money saved if you can’t use some of it to help people you care about, but it was definitely tough to make each of those decisions.

10. What will you do about health insurance in early retirement?

We fully expect the landscape around health care in the U.S. to keep shifting, but for now we have health insurance that we purchased through the Affordable Care Act exchange. It’s a bit pricey but it’s normal insurance, which is a huge comfort to have!

11. What are your long-term plans now that you will have significantly more time not working?

We’re trying to keep things as open-ended as possible! I’m definitely going to keep writing the blog, and we’re both actively volunteering in our community. We went to Taiwan earlier this year and are planning a few more trips through the end of 2018, and then, who knows?

We’re exploring getting a very small motorhome (not big and fancy like yours, Michelle!) that we can use for road trips around the west, but that’s not for sure yet. A few years ago, we decided that our purpose is service, adventure and creativity, so while we don’t yet know what path our lives will take, we know we’ll be doing some of each of those three.

12. Are you doing any lifestyle changes to reduce your expenses in early retirement?

We are! When we were working, we were so crunched for time that we ate a lot of frozen and convenience foods, even though we would have preferred to make everything from scratch. We also couldn’t really comparison shop because we didn’t have time for that. But now we’re making more food from scratch and visiting a wider array of stores and learning what items are priced best at each place.

We’re also DIYing everything we can now that we have time to do that. But beyond that stuff, we were already living at a level we were comfortable with and that let us save a lot, so it doesn’t feel like we need to trim much more. But ask me again in a year, and maybe I’ll have found some new ways to save!

13. I’m curious to know what your methods for staying focused on accomplishing such a major goal?

Even in the very best case scenario, saving for early retirement takes years, so it’s important to know up front that you will feel some impatience along the way. Everyone who’s done it has felt it at one time or another, or maybe many times!

We found it helped a ton to track our progress and look at it often, so that we could see how far we’d come. And having everything automated also helped because we didn’t even give ourselves the opportunity to have the thought, “We’d rather spend this money instead this month to treat ourselves.” And finally, we didn’t deprive ourselves, and I think that’s important.

Living solely for tomorrow is not the way to be happy with your life – you have to allow yourself some joy today. We tried to keep things modest, of course, but we still let ourselves do fun things and spend money on things that made us happy instead of saving all our money. Living for both today and tomorrow helps with the impatience a ton!

14. If you were starting back at ground zero, what would you do differently from the beginning?

If I could go allllll the way back, I’d never set foot in Target! Haha. When I was just starting out in my career, Target was my kryptonite, and I wouldn’t set foot in there without buying a whole bunch of home decoration stuff that I didn’t need. One of my best practical saving tips is to know your spending triggers and avoid them, so to this day, I do not set foot in Target, and I get what I would have bought there on Amazon or at less tempting stores.

But if we’re just talking about the beginning of the early retirement journey, we would for sure have invested in more rental properties. Real estate offers a quicker path to financial independence than does saving, and it gives you some diversification you don’t get by only investing in the markets. I thought I’d hate being a landlord and so wasn’t interested in real estate, but now that we’ve done it for several years, we wish we had put more focus on rental properties.

15. Lastly, what is your very best tip (or two) that you have for someone who wants to reach the same success as you?

Don’t just think in terms of numbers. Get clear about what you really want to be doing with your life – what that looks like, what will make you feel like you have a purpose, what you want to be able to look back on at the end of your life and feel proud of – and then decide what you’re willing to give up to make that happen. Doing that exercise will help you figure out much more quickly how much your new life will cost and how much you can afford to save now, but best of all you’ll have the motivation to do that saving because you will have already invested the time in forming that solid vision for yourself instead of saving just to save, or just because you don’t like your job. If you retire early just because you don’t like your job and not because there’s something else you’re super stoked to do, you’ll probably be unhappy in early retirement, too.

And on the numbers front, don’t just focus on saving money. Focus on earning more. There’s a limit to how much spending you can eliminate but no limit to how much you can earn, so don’t neglect that half of the equation.

Are you interested in early retirement? Are you saving for retirement?

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May 23, 2023 by Brett Tams

How to Invest in Nuclear Fusion Energy

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Nuclear fusion may well be the technology of the future.

Not a technology. For many engineers, if physicists can ever crack the secrets of fusion, it may be to the 21st century what coal was to the 19th and petroleum was to the 20th. This could become a new ubiquitous technology, a part of infrastructure found on every part of the globe.

For investors, there’s enormous potential here. If you’re looking to understand how the technology of the future can power your own retirement as well, read on.

For help building a balanced investment portfolio, consider working with a financial advisor.

Nuclear Fusion Basics

Nuclear fusion energy is the idea of generating electricity from combining two atoms to create a new one. When two atoms fuse, the resulting atom has slightly less mass than the sum of its parts. This is due to the weak nuclear force, a form of mass/energy which binds subatomic particles together into atoms. Each atom has its own binding energy, so when two atoms are combined into a single entity this leftover binding energy is released as lost mass from the resulting atom. That generates the heat of a fusion reaction.

Fusion is the corollary to fission, the other currently understood source of nuclear energy. With fission, you create a reaction that splits a large atom into two smaller atoms. With fusion, you create a reaction that joins two smaller atoms into a larger one. Fission is rarely found in nature at large scale, but fusion is the power source for stars.

As a power source, fusion has many benefits over fission.

First, fusion is far safer than fission. Once you start a fission reaction, you must actively control it or it can flash consume all of its fuel in an explosive event. The hydrogen that fuels a fusion reaction, on the other hand, can be added as its consumed, meaning that the entire reaction will cease if you simply stop adding fuel. After a reaction, fission leaves behind highly toxic radioactive waste that can even be weaponized in the wrong hands. Fusion leaves behind helium, an inert and harmless gas that the world could actually use more of.

Fission is powered by relatively rare and expensive enriched uranium. Fusion is powered by an isotope of hydrogen, the most common element in the universe.

To top it all off, fusion generates more power than any other known process. With an equivalent amount of fuel, a fusion reactor can generate four times as much electricity as the fission reactors that current nuclear power plants use. That same fusion reactor can generate 4 million times as much energy as a chemical plant powered by coal or oil.

Fusion’s Problem

The basis behind a fusion reaction is what’s known as “the bottle.” It’s not currently possible to wrap up even tiny stars in a physical reactor. Any solid material would vaporize right away. Instead, the fusion reaction takes place inside a high-energy plasma. That plasma, in turn, is contained by a series of powerful magnetic fields. These shaped magnetic fields are called “the bottle.” The bottle contains and directs the heat of the fusion reaction, making it safe and productive.

The problem is that, with current technology, it takes more energy to sustain the magnetic bottle than the fusion reaction produces. The hotter you burn the reactor, the more energy it takes to keep the reaction contained. The result is energy-negative.

That’s changing however. Advances in several different fields, from mathematics to superconductors, are making it steadily more efficient to generate the magnetic bottle that contains and sustains a fusion reaction, and in 2022 the Lawrence Livermore National Laboratory made a credible claim to have generated a positive-sum reaction.

Investing In Fusion Through Companies

Investing in fusion is not easy. Since this is a developing technology, any investment in this field is fundamentally speculative. There are no publicly traded companies that operate fusion reactors, because no commercial fusion reactors exist yet. You can’t have an industry around a product that only exists as a very convincing theory.

That said, this is still a billion-dollar industry, with around $4.8 billion invested as of 2022. While much of that work is being done by government and university labs, there are several dozen private startup companies that are trying to develop their own reactors. Firms like Helion Energy and Commonwealth Fusion Systems have generated hundreds of millions in investment capital. Unfortunately for individual investors, they remain private companies. If you are an accredited investor, you can look for shares that someone might be willing to sell. Otherwise, it’s not currently possible to buy into a fusion company directly.

Instead, you have two major options.

Invest In Investors

First, you can invest in publicly traded companies that have themselves invested in fusion companies.

This is a technology that promises to fundamentally change the energy economy from the ground up, and the big players aren’t sitting that out. Major technology companies like Alphabet (GOOG) and Amazon (AMZN) have invested in fusion research companies. Lesser-known, but still large, firms like Babcock International (BCKIF) and Cenovus Energy (CVE) have done the same.

These companies have a significant stake in the companies that are trying to develop fusion technology. If those underlying investments pay off, the benefits will extend upward.

Other sources on this subject also recommend investing in firms that can benefit from the results of fusion, namely vast and cheap energy. If you want to do this, we recommend simply investing in the S&P 500. The reality is that virtually every company will benefit from these productivity gains and cost reductions. There’s no good way to pick a clear winner or loser, because all companies rely on energy-intensive resources.

Invest In Energy Companies

However advanced, fusion is still fundamentally an investment in the energy sector. The result is that investors looking to get into this market can do so by taking a long-term position in the energy sector.

You can do this by investing in specific energy source companies like Chevron (CVX). You can also invest in utilities that run power plants, like Duke (DUK) or National Grid (NGG). Or, you can invest in energy-sector funds. These would include mutual funds or ETFs like the Vanguard Energy ETF (VDE) or Global X Renewable Energy Producers (RNRG).

This is a long-term investment. Researchers are confident that fusion will become a viable, long-term energy source, one likely to significantly outlive fossil fuels. It’s not here yet though and, once it arrives, it probably will take quite a while to really take off. This is a good investment for your retirement portfolio, but probably not for the swimming pool fund.

Investing In Fusion Through Materials

Side-investing in nuclear fusion is another potentially good strategy.

Fusion relies on a handful of specialized resources to build its reactors and sustain its burn. The fuel source for fusion will be a mix of hydrogen isotopes called deuterium and tritium, although current experimental reactors only use deuterium. For the science-curious:

Hydrogen atom – An atom with one proton and one electron
Deuterium – An atom with one proton, one neutron and one electron
Tritium – An atom with one proton, two neutrons and an electron

The heavier nuclei of deuterium and tritium make them easier to fuse and release more energy in the process. As an investor, you can seek out companies that produce deuterium gas (tritium is not yet produced in commercial quantities).

You can also seek out desalinization companies. Hydrogen isotopes are generally produced from water, by separating the molecule’s oxygen and hydrogen atoms from each other. To get enough water without wasting potable and agrarian supplies, producers will most likely rely on seawater production, which requires large scale desalinization.

Finally, you can seek out firms that make the components of a reactor itself. On this, we cannot offer specific advice because nobody knows what a working fusion reactor will be made of. Most likely, commercial fusion reactors will rely on superconducting materials to make the core of the electromagnets that contain the reaction. Companies that produce materials like mercury, titanium, niobium alloys, and next-generation ceramics are all good candidates as long-term suppliers for a fusion reactor’s core.

Bottom Line

Investing in fusion may be one of the most solid bets anybody can make on long-term investments in the future. You can do so by investing in companies that are trying to build their own reactors, by investing in the energy sector or by investing in the companies that will someday fuel these reactors.

Energy Investment Tips

Fusion is the big dream of next-generation energy. Before physicists crack that puzzle, though, there are many ways you can invest in next-generation energy right now.
A financial advisor can help you build an investment portfolio that includes fusion investments. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

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Source: smartasset.com

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May 22, 2023 by Brett Tams

Are you looking for the best small business ideas?

Whether you are looking for an online business that you can start and do from home, an in-person business, or something else, there are many different businesses that you can start. picture of items (piggy bank, clock, plant, books, notepad) on desk with words that say "30 small business ideas to become your own boss in 2023"

According to the U.S. Small Business Administration, there are 31.7 million small businesses in the U.S. And 81% of these small businesses (25.7 million) have no employees.

If you’ve dreamed of being one of those 30 million plus people who work for themselves, then this list of small business ideas is for you!

Many of the businesses on this list are affordable to start and require minimal equipment. And you will probably be surprised that you already have what you need to start many of these top small business ideas.

I have been running my business (this blog!) for a little over 10 years now, and I am extremely grateful for it. Even though I’ve made seven figures from my blog over the years, it’s still a very small business overall.

What I love about my business is that I don’t have to commute, I get to be my own boss, I can decide how I earn a living, I am able to create a flexible schedule, and I can travel whenever I want.

There are many other small business ideas on this list that offer the same positives I have experienced from blogging.

Many small business owners I talk to will tell you about benefits!

Today, I am going to talk about the many different small business ideas that you can start this year. I hope you are able to find the perfect one for you and your liking and needs.

36 Small Business Ideas

1. Blogging

Like I said above, out of all of the small business ideas on this list, blogging is my favorite.

This can be a great online option for beginners, as you don’t need previous experience, and the majority of bloggers are brand new to blogging.

I was completely new when I started my blog, and I learned everything I know along the way through trial and error (I’ll be honest, I made a lot of mistakes!), by reading free resources, and by networking with other bloggers.

Since I started Making Sense of Cents, I have earned over $5,000,000 from my blog through affiliate marketing, sponsored partnerships, display advertising, and online courses.

Blogging allows me to travel full time, have a flexible schedule, and I earn a great income doing it.

You can learn how to start a blog in my free How To Start a Blog Course.

Here’s a quick outline of what you will learn:

Day 1: Why you should start a blog
Day 2: How to decide what to write about (your blog niche!)
Day 3: How to create your blog (in this lesson, you will learn how to start a blog on WordPress)
Day 4: The different ways to make money with your blog
Day 5: My advice for making passive income with your blog
Day 6: How to get pageviews
Day 7: Other blogging tips to help you see success

Other similar small business ideas online include starting a YouTube channel and creating TikToks.

2. Selling printables from home

If you’re looking for small profitable business ideas that have low startup costs, then selling printables on Etsy may be a good fit for you.

Creating printables can also be quite passive because you just need to create one digital file per product, which you can then sell an unlimited number of times. Because you only need a laptop or computer and internet connection, it can be quite affordable to start.

But what are printables?

Printables are digital products that customers can download and print at home. Some examples are bridal shower games, grocery shopping checklists, budget planners, invitations, printable quotes for wall art, and patterns.

You can sign up for this free ebook that helps you figure out where to start when it comes to selling printables on Etsy.

You can also learn more at How I Make Money Selling Printables On Etsy.

3. Litter cleanup business

If you’re a business owner, having trash and litter on your property isn’t the best way to welcome people to your business. That’s why some business owners are willing to pay to have their property cleaned up before open hours and make it more presentable to customers.

This is a small business idea you can start on your own, and you can get paid $30 to $50 an hour.

You will need a broom, dustpan, and grabber tools, and you can have a fairly flexible schedule with a litter cleaning business.

You can learn more at How I Started A $650,000 Per Year Litter Cleanup Business.

4. Virtual assistance

A virtual assistant is someone who works for a person, company, or business owner to do administrative and business tasks to help a business run smoothly. Think of them like in-person assistants, except they work at home and online.

Becoming a virtual assistant is one of the most popular small business ideas at home.

In fact, I used to work as a virtual assistant!

I worked for several startups and small business owners. I did not have previous experience, and I simply learned the skills as I worked. It allowed me to earn a great income, plus I was able to work from home.

This is one of several small business ideas on this list that is growing quite quickly, and more and more people are in need of virtual assistants.

Virtual assistant (VA) tasks may include:

Social media management
Managing a person or company’s calendar
Formatting and editing content
Scheduling appointments or travel
Creating or assisting with slideshows or presentations
Email management
Communicating with clients or customers

And so much more.

The type of work you do depends on the needs of your employer.

Usually, you can start out as a virtual assistant earning at least $15 to $20 per hour, but sometimes you may be able to start at double or even triple that depending on the field you work in and the services that you offer.

As a full-time virtual assistant, you may be able to earn over $10,000 a month.

You can learn more at How I Earn $10,000 Per Month From Home as a Virtual Assistant.

If you are interested in finding virtual assistant jobs, I recommend signing up for the free workshop 5 Steps To Become a Virtual Assistant. There, you will learn how to become a virtual assistant, even if you have no experience.

5. Selling stickers from home

Creating stickers to sell on Etsy is one of the most fun low-cost and small business ideas for creative people, and stickers are really popular.

My friend Mim started without any graphic design skills, and she didn’t know how to create stickers when she first started. It’s something she learned as she went, and she has now turned this into a $100,000+ yearly business.

I interviewed her here on Making Sense of Cents and asked her:

Does someone need to be a graphic designer to make and sell stickers?
Why do people buy stickers online?
Do stickers sell well online?
How much money can you make selling stickers as a small business idea?

And more!

You can head over to How To Make $1,000+ A Month Selling Stickers Online to read more.

6. Pet sitting and dog walking business

Yes, you may be able to start a part-time or full-time business pet sitting or walking dogs.

You may be watching pets in your home or going over to the pet owner’s home to take care of the pets.

As a dog walker, you can earn $20 an hour or even more.

For pet boarding, you can make around $25+ per day for watching someone’s dog or other pet in your home. This is a great service to offer, and if you love animals (which you should if you are going to do this), then it could be fun as well!

Rover is a company you can sign up with and list your dog walking and/or pet sitting services.

7. Bookkeeping

A bookkeeper is someone who helps manage and track the financial side of a business. They typically keep track of sales, expenses, and produce financial reports.

This is a skill you can learn from home.

My friend Ben, from Bookkeepers, helps people start their own bookkeeping businesses even when they don’t have any experience. Ben is a CPA who founded his business after realizing that many business owners needed better bookkeepers.

I interviewed Ben and asked:

What exactly is a bookkeeper?
Who are the typical clients of a bookkeeper? How can I find clients?
How much money do new bookkeepers make?
How can a person learn how to become a bookkeeper without previous experience?

You can read all of his answers to these questions and more in our interview Make Money At Home By Becoming A Bookkeeper.

Plus, you can sign up here for a free resource that will teach you more about starting and running one of the most profitable business ideas as a bookkeeper.

8. Reselling items

Finding items to resell may be one of the best small business ideas on this list because we all have things in our house we could probably sell.

Plus, there are always things that you can buy for a low price and possibly resell for a profit.

This is such a profitable idea that Melissa’s family earned $133,000 in one year through buy-and-sell flipping, and they were working only 10-20 hours per week.

Since then, they have turned this into an even bigger and more profitable business!

Some of the best items they’ve resold include:

Something they bought for $10 and flipped for $200 just 6 minutes later
A security tower they bought for $6,200 and flipped for $25,000 just one month later
A prosthetic leg that they bought for $30 at a flea market and sold for $1,000 on eBay the very next day

If this is one of the small business ideas you’re interested in, learn more at How Melissa Made $40,000 In One Year Flipping Items.

9. Freelance writing

Freelance writing is a business idea that doesn’t require a background in writing or a degree in English or creative writing. Some people are naturally good writers, but you can also develop the skills to become one.

A freelance writer is someone who writes for a number of different clients, such as websites, blogs, magazines, advertising companies, books, and more. They don’t work for one specific company, rather they work for themselves and contract out their writing.

If you are interested in learning more about how to become a freelance writer, please head to the article 14 Places To Find Freelance Writing Jobs – (Start With No Experience!).

10. Selling items on Amazon

Selling items on Amazon is another one of the most fun small business ideas.

Even if you have no experience selling on Amazon, you can earn money selling household goods, books, electronics, and so on.

My friend Jessica Larrew and her family started selling things on Amazon FBA without any experience, and they made over $100,000 profit in their first year! And they were working less than 20 hours a week total.

Jessica has a FREE mini course that will teach you everything you need to know in order to start selling on Amazon. You will learn how much it costs to start an Amazon business, the supplies you need, how to find inventory, and more.

11. Proofreading

Proofreading is an in-demand job, making it one of the best small business ideas if you’re good at catching and correcting writing errors.

To become a proofreader, you simply need a laptop or tablet, an internet connection, and the skills to proofread.

Proofreaders look for punctuation mistakes, misspelled words, lack of consistency, and formatting errors. They edit blog posts, articles, website copy, advertising, books, academic papers, emails, and more.

In one year, my friend Caitlin made a little over $43,000 as a freelance proofreader.

I interviewed Caitlin on what it takes to become a proofreader, and she explained:

What proofreaders do
How much money proofreaders make
The steps to become a proofreader

You can learn more at How To Become A Proofreader And Work From Anywhere.

Also, Caitlin created a FREE 76-minute workshop where she answers all of the most common questions about becoming a proofreader, and she even shows you how to use the most popular tools used by proofreaders around the world. You can sign up for free here.

12. Creating and selling Canva templates

Creating and selling Canva templates can be a great way to make extra money because you just need to create them once, and you can sell them an unlimited number of times.

Working just a few hours a week, my friend Maliha is able to earn $2,000 each month selling Canva templates online.

I interviewed Maliha about this topic and asked:

What exactly is a Canva template? What is Canva?
How do I sell my designs on Canva?
Why do people buy Canva templates?
Can someone with no tech skills create a Canva template?

Please head over to the article to learn more at How I Make $2,000+ Monthly Selling Canva Templates.

13. Podcast virtual assistance

There is currently a large demand for podcast virtual assistants.

Even though there are over 2,000,000 podcasts, that number continues to grow – why it’s one of the best small business ideas!

While the podcast host can record themselves, other tasks like editing and publication take time, so many podcasters outsource work to virtual assistants. It’s a more efficient use of their time, and they can focus their time on other areas of their business.

Some of the different podcast services you may provide include:

Editing audio
Marketing and promotion of the podcast
Publishing the podcast episode
Show note creation

If this is one of the small business ideas you’re interested in, learn more at How I Make $1,500 A Month As A Podcast Virtual Assistant.

14. Freelancing

Freelancers own their business and contract out their services to other business owners or individuals. A business may hire you for one-time gigs, or you may get a long-term freelancing job with a company.

In addition to some of the freelance jobs I’ve already mentioned (writing, proofreading, and bookkeeping) there are even more freelance small business ideas, including:

Graphic design
Web design and development
Personal training
Consulting
Search engine optimization (SEO)

This is one of the best small business ideas because you can use a skill you already have and start finding work on job platforms like UpWork and Fiverr.

15. Help Google evaluate search engine results

A Search Engine Evaluator (also known as a Google Rater) is a person who rates websites based on their quality and usefulness.

You are rating websites to help Google improve their search engine results.

This can be a good beginner online job idea to start because you don’t need previous or technical experience. Google wants average people rating their sites.

And because Google operates in nearly every country, you can work on sites that are in your native language.

Learn more at How To Become a Search Engine Evaluator.

16. Voice over acting

A voice over actor is the person you hear but rarely see on YouTube videos, radio ads, explainer videos, corporate narration, documentaries, e-learning courses, audiobooks, TV commercials, video games, movies, and cartoons.

This job doesn’t require previous experience or special skills – you just need to have the voice the company is looking for.

In 2014, Carrie replaced her salaried day job to become a full-time voice over actor. Because people are constantly asking her how she got her start and how they can too, Carrie created a six-week online course, which sold out! Several of her students booked voice acting jobs before the class was even over!

You can read my interview with her at How To Become A Voice Over Actor And Work From Anywhere.

17. Managing Facebook ads for small businesses

By managing Facebook ads, you are helping small businesses expand their market and find new customers, and you can make around $1,000 to $1,500 extra a month per client.

Companies spend tons of money every day on Facebook advertising. But most small business owners don’t really know how to create Facebook ads, which is where you get involved.

My blogging friend Bobby knows a lot about this topic, and I interviewed him about running Facebook ads for small businesses. In our interview, you will learn:

Why do small businesses pay for Facebook ads?
How can a person find their first paying Facebook ads client?
How much can you earn doing this type of work?

Also, Bobby has a free webinar on this topic (you can sign up here), which will teach you how to start this business even if you’re brand new, how to find paying clients, and more.

18. Transcribing audio or video files into text

Transcription is when you turn audio or video content into a text document.

There are many businesses looking for transcriptionists too – since general transcriptionists convert audio and video to text for virtually any industry, there really isn’t a typical client. Some examples of clients include marketers, authors, filmmakers, academics, speakers, and conferences of all types.

Beginning transcriptionists earn around $15 an hour to start, and this is one of the small business ideas on this list that doesn’t require previous experience.

You can learn more about how to become a transcriptionist in the interview Make Money At Home By Becoming A Transcriptionist. The interview covers topics such as:

The steps to become a transcriptionist
How much money you can expect to make
The type of training you need to become a transcriptionist

19. Scoping

Scoping is when you are editing legal documents for court reporters. This is different from proofreading for court reporters.

Scopists who are working with an average court reporter tend to make around $30,000 to $45,000 per year working pretty much full time.

I interviewed an expert on the topic – Linda from Internet Scoping School. She has been scoping for over 35 years and has taught scoping online for nearly 20 years.

She also has a free course that will introduce you to scoping so that you can decide if it’s one of the small business ideas you want to pursue. You can find the free course by clicking here.

You can learn more at How To Become A Scopist.

20. Starting a home dog bakery

Do you love dogs? If so, this is one of the best unique business ideas. No previous baking experience is needed, as this is a skill you can learn.

You can make dog treats, cupcakes, cookies, cakes, and more.

With a dog treat bakery business, you may be able to earn an extra $500-$1,000 a month or more.

You can learn more at How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).

Plus, you can sign up for this free training workshop that teaches you the small business plan for starting your own pet bakery.

21. Food photography

Did you know you can make money taking photos of food for bloggers, websites, and more?

Bloggers often hire food photographers to recreate recipes and take pictures of them so that the pictures can be shared on their blog.

Many food photographers are making $50,000 a year – some making over $100,000 each year – by working for bloggers.

You can learn more at How To Become a Food Blog Photographer And Earn Over $50,000 Each Year.

22. Start an online store

Yes, you can start your own online store, and you don’t need to have tons of experience or a lot of money to do so. Many people even start with no background in retail management.

I had the opportunity to interview Jenn Leach of E-commerce and Prosper, who explains how she started an online store, determined inventory, and saw lots of success with it.

Since she started her small business, she has developed and grown three successful online e-commerce stores earning an average of $19,000 per month.

You can read our interview at How Jenn Makes Over $10,000 A Month With Her Online Store In Less Than 10 Hours Per Week.

23. Social media management

With a social media management business, you are managing the social media accounts for a business.

As a social media manager, you may be managing a company’s TikTok, Pinterest, Instagram, Twitter, Facebook, and so on. You may specialize in one platform (such as TikTok), or you may help a company in more than one area.

Social media can be a great way to bring new customers to a business, which can help a business grow.

24. Real estate agent

A real estate agent is someone who helps people, like you and me, find real estate to buy or sell. This may be a storefront, a home to live in, rental real estate, land, and more.

A real estate agent is typically paid by commission of a percentage of the property’s sale price.

To become a real estate agent, you only need a high school diploma and a professional license. The 2021 median pay according to the U.S. Bureau of Labor Statistics is $23.45, or $48,770 per year.

However, there are many, many real estate agents who earn much more money than this.

25. Event planning business

Do you enjoy planning events? Do you want to become a wedding planner or plan other types of events?

With an event planning business, you may specialize in planning weddings, birthday parties, corporate meetings, conventions, reunions, parades, fairs, product launches, and so much more.

Event planners are responsible for completing tasks related to designing the event, finding event space/location, deciding and planning on food, arranging transportation for attendees, coordinating the events for the day, and more.

Your attention to detail is greatly needed in this position, as you don’t want anything to be overlooked.

26. Airbnb Experience host

An Airbnb Experience is an activity that you host for travelers and list it on Airbnb. The events can be in person or virtual.

Here’s the official description of Airbnb Experiences:

“Airbnb Experiences are in-person or online activities hosted by inspiring local experts. They go beyond typical tours or classes by immersing guests in a Host’s unique world.”

There are many different experiences that you can host such as:

Astronomy tours
Cooking classes
Walking tours
Bike rides
Pub crawls
Hikes
Kayak adventures

And more.

If you’re wondering “What unique business can I start?” then this is it, and you can learn more at How to Make Money as an Airbnb Experience Host.

27. Vending machine business

Have you thought about starting a vending machine business?

You may be able to earn $1,000+ a month by running a vending machine business.

You can learn more at How To Start A Vending Machine Business – How I Make $7,000 Monthly, including:

Is there room for new people to have a vending machine business?
How much does the average vending machine make in a day?
What type of vending machines make the most money?
How much does an actual vending machine cost?
How many hours does it take each week to run a vending machine business?
What are the negatives of owning a vending machine business?

28. Rental real estate business

What small businesses are most profitable? Real estate is one of them!

Rental real estate is when you own a property and you rent it out. You may be renting it out to a long-term renter who is looking for a home to live in, a short-term Airbnb rental, commercial real estate, and more.

Some helpful blog posts that you may enjoy about this topic include:

29. Rent out your garage

Yes, you can earn an income by renting out your garage.

Neighbor is the Airbnb of storage space.

Instead of hosting guests, you are hosting storage!

You can use this website to list your unused space for rent and make up to $15,000 per year by doing so. With Neighbor, you can rent out your garage, driveway, basement, or even a closet.

You can set your own prices and decide for yourself which reservations you want to approve and host.

You can sign up for Neighbor for free here and list your space.

30. RV rental business

If you have an RV you aren’t using, then you may be able to make $100 to $300 a day, or more, by renting it out to others through RVShare.

There are some people who make this a full-on small business, and they buy several RVs for the sole purpose of renting out and making money too.

RVshare is one of the best money-earning apps because it helps travelers save money by cutting out the middleman and offering RV rentals directly from RV owners.

Think of RVshare as Airbnb for RVs.

You can rent all kinds of RV on RVShare, such as:

Class B camper van
Travel trailer
Fifth wheel
Pop-up trailer
Class C Motorhome
Class A Motorhome
Toy hauler

RVshare also securely handles all payments and releases funds to your bank account one business day after the start of each rental.

You can learn more at How To Make Extra Money By Renting Out Your RV.

31. Affiliate marketing business

Affiliate marketing is when you earn money by placing a referral link on your website, blog, Instagram, and so on and have people purchase a product or service through your referral link.

An example would be Amazon book sales, where you link to a specific book on your blog and try to get people to purchase the book through your affiliate link. Amazon and other companies want quality affiliates under their belt because they want all the help they can get to promote the products and services they are selling.

If you get someone to sign up through your affiliate link, the company rewards you for promoting their product.

You can share an affiliate link with your audience in many different ways, such as:

By adding an affiliate link to your blog (you can do this by inserting a link within a blog post, page, email, etc.)
Sharing it on social media

If you want to learn more about affiliate marketing, I recommend signing up for Affiliate Marketing Tips For Bloggers – Free eBook.

32. Selling an online course

I created Making Sense of Affiliate Marketing in July of 2016 as my first online course. Since then, I have earned $1,000,000 from that single course.

You might not realize it, but you probably have a course in you too!

There are successful courses covering all sorts of different topics, such as:

Parenting
Woodworking
Dog training
Playing an instrument
Teaching a language
Traveling
Watercolor painting
Gardening
Calligraphy
Business

And so much more!

Creating an online course is one of the fastest ways to leverage your time, increase your earning ceiling, and help more people.

Learn more at How I’ve Made Over $1,000,000 From My First Course Without a Big Launch.

33. Writing a book

Writing your own book is a great way to make money from home, and there is probably something super helpful that you could write about (even if you think otherwise!).

In fact, my friend Alyssa self-published her first book and has sold more than 13,000 copies.

She was able to earn $6,500 in one month alone!

Learn more at How Alyssa is making $200 a DAY in book sales passively.

Another great article to read on this small business idea is How I Made $2,000 in 1 Week by Writing an eBook.

34. In-home daycare small business

This is one of the best small business ideas for parents because it allows you to easily stay home with your kids while making money.

Even if your kids are grown up and out of the house, your experience as a parent will go a long way with this job.

Depending on where you live, there may be some special licensing required. However, you may be able to start with just one or two children and not need to do any extra legal work. Just make sure you check with your city or state first.

You should also make sure your home is safe for kids and be CPR certified. Remember, safety is extremely important in this field.

35. Cleaning houses

Cleaning houses isn’t one of the most glamorous small business ideas, but you can make anywhere from $25 to $50 per hour cleaning for other people.

There are cleaning businesses you can work for, but you will make the most money if you work for yourself.

This is a very affordable business to start because you probably already have the cleaning supplies you need, and you can list your services on Facebook, tell your friends and family, or create an account on Care.com.

36. Handyman services

Busy people are always paying handymen to take care of small household tasks, like hanging new light fixtures, installing a new doorbell, fixing grout, or painting.

Most charge between $60 to $100 per hour. Listing your services on local social media groups or using word-of-mouth is one of the best ways to find your customers.

If this is one of the small business ideas you’re interested in, see what your state’s rules are regarding licensing. Some states have strict rules, while others don’t.

What else can I do to make extra money?

There are many different things that you can do to make extra money, in case you are wanting something other than to start a small business.

Some of the different ways to make extra money include:

Which business is best for beginners?

The best small business ideas for beginners are the ones that are flexible and have minimal startup costs. Freelancing, where you can leverage existing skills, can be a great place to start.

What small business ideas are successful?

If you want to become an entrepreneur and start your own business, there are many ideas that you may be interested in pursuing.

This may be dependent on your current expertise, what you are interested in learning about, your passions, whether you want to work full-time or part-time, and more.

Some of the best business ideas include:

Blogging
Selling printables from home
Litter cleaning business
Virtual assistance
Selling stickers from home
Pet sitting and dog walking business
Bookkeeping
Reselling items
Freelance writing
Selling items on Amazon
Proofreading
Creating and selling Canva templates
Podcast virtual assistance
Freelancing
Helping Google evaluate search engine results
Voice over acting
Managing Facebook ads for small businesses
Transcribing audio or video files into text
Scoping
Starting a home dog bakery
Food photography
Starting an online store
Social Media Management
Real Estate Agent
Event planning business
Airbnb Experience Host Business
Vending machine business
Rental real estate business
Renting out your garage
RV Rental business
Affiliate marketing business
Selling an online course
Writing an book
In-home daycare small business
Cleaning houses
Handyman services

And, the list doesn’t end here. There are many, many other small business ideas that you can start.

Are you interested in starting a small business? What is your favorite small business idea?

*Small business statistic from the U.S. Small Business Administration

The benefits of having a low stress job after retirement

Jobs to Do after Retirement

What are fun jobs after retirement?

What can I do after retirement to make money?

Tips to Making Money in Retirement

Which job is stress free and high paying?

Really Focused on less stress?

Best low stress jobs after retirement

1. Freelance writing

2. Tour guide

3. House Sitter

4. Librarian

5. Customer Service Representative

6. Craft seller

7. Crossing Guard

8. Blogging

9. Elder Care Services

10. Private Island Caretaker

11. Docent or Usher

12. Work at Disney

13. Invest in Various Intiatvies through Crowdfunding

14. Tutoring

15. Virtual assistant

16. Personal shopper

17. Personal organizer

18. Animal shelter worker

19. Book store assistant

20. Photographer

21. Life coach

22. Consultant

23. Walmart Greeter

24. Dog walker

25. Pet sitter

26. Camp Host

27. Adjunct Professor

28. Author

29. Focus group participant

30. Furniture flipper

31. Delivery driver

32. Rideshare driver

33. Taxi Driver

34. School Bus Driver

35. Chat moderator

36. Babysitter & Nanny

37. Event Staff

38. Research Assistant

39. Substitute Teacher

40. Airbnb Host

41. Proofreading

42. Park Ranger

43. Voiceover artist

44. Real Estate Agent

45. Sports Coach

46. Artist

47. Translator

48. Interior decorator

49. Handyman Services

50. Professional cuddler

51. Mediator

52. Data entry specialist

53. Waiter/ Waitress

54. Cook

55. Become a Transcriber

56. Retirement planner

57. Flip Items

58. Professional Volunteer

How to find a job that is low stress and matches your skills?

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