by Griffin Goyette
One of the main issues today is the Americans lack of knowledge on how to make money grow. People work hard for their money to save for retirement but what happens to the money in the bank. When saving money in a bank you generate interest but is this really worth it. A million dollars in a savings account will generate about 1% interest of $10,000 but there are ways to make so much more than that a year without any effort at all.
One way to make money grow is a municipal bond. This is when you as a citizen use your money as a loan to the government for projects such as building roads. Say you loan them 1 million dollars, you will see a 4-6% increase based on interest on your million dollars in one year. This means you just generated 50,000 untaxed dollars in one year. Bringing in 50,000 cash untaxed dollars is how much somebody with a 70,000 dollar salary brings home after taxes. This is just one way to make your money grow but there are ways to see even larger amounts a year.
If you want to possibly see bigger returns in your money and are willing to take a small risk a Index fund is for you. An index fund is a collective investment in the stock market but there is a much lower risk in this than investing into individual stocks on your own. On average an Index fund brings in 8 to 9% interest which from a million dollar investment is 80,000 to 90,000 dollars. This amount of money a year is a sustainable living wage.
The two methods are very important for Americans to learn because it is an easy way to grow money and retire earlier. It is just as important to save if you don’t save you won’t have any money to invest. Investing in either one of these options can allow for you to live a much more sustainable life. With a million dollars saved you can invest and make three times the average Americans wage for simply doing nothing. Relative to a million dollars this may not seem like a lot but if you bring in 90,000 dollars a year a retired person you probably won't spend all that 90,000 meaning your saving is going to keep growing and if you are still in the work force and extra 90,000 a year can help to retire even earlier and avoid from certain costs in life diggin into your savings.
This process however is never ending. If you started with a million dollars and saw a 7% Interest rate in just 9 years you will have 2 million dollars doubling your money for simply investing.
Works Cited
“Mutual Funds - Guide to Types of Mutual Funds and How They Work.” Corporate Finance Institute, 14 Apr. 2020, corporatefinanceinstitutecom/resources/knowledge/trading -investing /mutual-funds/.
Phillips, David, and Jk. “How Much Interest Does 1 Million Dollars Earn Per Year?” Engineer Your Finances, 14 Jan. 2021,www.engineeryourfinances.com/2020/11/much -interest-1-million-dollars-earn-per-year/.
I never knew that there was such a big difference in the ways a person can save money! I think this system is a good way to encourage people to invest money so that the economy can grow, rather than saving it for themselves. By providing an option to grow money, the system allows companies to access funding to pay for initial costs and expand their infrastructure while providing a lucrative saving mechanism for everyone else.
ReplyDeleteAshley Anderson - I specifically chose to read more about your blog post because learning new things about how to not only save your money, but to also grow the amount of money that you have is very important! For me personally, having a savings account is my utmost priority (since I am saving for college, gas, daily necessities, etc.). I found it very interesting that you stated, "One of the main issues today is the Americans lack of knowledge on how to make money grow." This is interesting to me because while Americans have the urge to obtain more and more money, they don't know how to go about doing so (in a way it's kind of a coincidence!). From further research, according to atypicalfinance.com, they found that, "If you want to gain control of your finances quickly, you need to start with two very important things: build a budget and track your money." In addition to everything you mentioned, I feel like having a appropriate budget and constantly tracking both your spendings and savings is extremely important for generating a living.
ReplyDeleteI liked that you provided information on multiple types of investments instead of just one. I think that Municipal Bonds are the best option, because while Index Funds are usually considered low-risk, I think that the stock market as a whole is in a bubble right now which is bound to pop eventually. On the other hand, Municipal Bonds are extremely low-risk, even if utilizing them instead of Index Funds or regular investments into the stock market means you have less overall potential for profit.
ReplyDeleteThis blog was very insightful for me to see, and others as well I'm sure, who constantly hear, "invest your money," but are never really told what that truly means. I enjoyed how to provided different options, including one I've never heard of before with the municipal bond, to give readers different ways to GROW their money, rather than letting it sit in the bank and grow only slightly. Municipal bonds intrigue me especially with the fluctuations of the stock market the past year with COVID, the risk seems to be a bit higher.
ReplyDeleteI didn't really realize how many ways there actually is for people to get money. I think is a great topic to start talking about since some of us are going to be in college very soon and then not long after that, we will be in the workforce. I really liked how you didn't just give us one way to invest our money but instead, you gave us multiple ways and that was very helpful because maybe some people don't want to do it a certain way.
ReplyDeleteIt's a lot to take in for anyone just beginning to save and invest to potentially grow your money. There are plenty of ways to save and liked how you explained all the different ways to invest. "One of the main issues today is the Americans lack of knowledge on how to make money grow." I feel this is a good statement to make as people around the US are constantly wondering how to make more money then they already are. I think it's extremely important to start saving money early and also invest as soon as you can as it could impact your future positively. Next few months or even years could be a little rough as the stock market is experiencing a ton of problems and issues, and all we can do is wait. Time is money!
ReplyDeleteThis was an interesting read. I liked how you explained multiple forms of investment. These sound like great strategies that I will use in the future. The fact that I can loan money to the government and make a 4-6% profit blows my mind. I believe that municipal bonds are the best option of investment for people who aren't familiar with the stock market, but index funds seem like a better option if you are familiar. Overall, the strategies you talked about seem worth considering.
ReplyDeleteThis was really interesting, as I didn't know there were so many "effortless" or easy ways to earn money with the money you already have. Something I was always taught through classes and life is that it's better to start saving now (ex. for retirement) so you don't have to think about saving too much later in life--so this could definitely come in handy for the long run. How much of a risk do you think it is to enter money into the stock market yourself? Would that ever be a viable and stable way to make money? Overall, I think you did a great job providing different options for the reader, this definitely helped!
ReplyDeleteI think it's such a great idea to invest, especially at a younger age & you did a great way of explaining that! I really liked the example you gave in the second paragraph, I am a visual person & it made it very easy for me to see how it works. Your blog was very insightful & useful!
ReplyDeleteI didn't know about these forms of investing. I think its cool that the municipal bond can have benefits other than making money later down the path, Like paying for new roads. One thing i'm curious about is what kind risks could come with the municipal bonds, as you mentioned with the index fund that there is a slight risk. Another question I have is that not many people are going to invest a million dollars into something with that risk, so i'm wondering how much money should the average person invest to make it worth your time and money and not worry about the risk.
ReplyDeleteIt is really interesting that if you start off with a million dollars, you can make a living wage just from investing your money. Even if you don’t have a million dollars to invest, this shows that you really should be actively trying to make more money with your money rather than letting it sit untouched. One thing I think you do need to be careful of though is the risk that investing comes with. Although it is a relatively low risk, there is still a chance that if you pick the wrong index fund and you get unlucky, you could lose a big portion of the money you invested. So, you should make sure that you always keep some money as a backup and not invest all of it.
ReplyDeleteI think it's important for people to have knowledge about all the different things you can put your money into. I feel like a lot of people turn away from the idea of investing in stocks because the risk is too high, it's a high risk, high reward situation. I believe that only a small portion on Americans invest in stocks (15%). If you just let your money sit in the bank for many years, that money will be worth less in 10 years, or have less purchasing power. Inflation is constantly changing, so it is wise to find alternate ways to build up your money without letting it sit in the bank. The information you presents was both insightful and helpful.
ReplyDeleteWilliam Castillo: This piece was incredibly interesting to me as I am getting older and obviously want to have the most interest and returns on the money I will have in the upcoming years. You did a good job having multiple options with their explanations very easy to understand, which gave me a better understanding on the importance of security (having money in different places), but also the incentives to risks (index funds for more potential growth). In relation to the ways you mentioned in your post, do you think it is more important to have compounded interest to maximize your money or to have more security?
ReplyDeleteI found this piece interesting because as a kid I remember learning a bit about interest rates and thinking that it was genius to put a lot of money in my bank account so I could make more money off my money. While some of that is true the return rate on a 1% interest isn't a high enough percent to grow your money. That why I liked your idea about a municipal bound or investing because while they may be a bit more risky, your return on it could be greater. Do you think that it would be smart for banks to increase their interests rates in order to get more people to join their bank?
ReplyDeleteThis blog post really made me think about doing more saving and investing. The main thing that interested me about this post was how you gave many different ways to use 1 million dollars to invest with. I think that the best one of those three options was the municipal bond. I thought that this was the best option and I may use it because it is a rate that you don't take any risk and you can make a good amount of money a year that isn't taxed. Another interesting thing that I found out of this was how savings in a bank isn't that great of a option; even though you make a fixed rate that is pretty low I think that it just isn't worth it because of how low the rate is in a bank. Overall, I thought that this blog post gave me good insight into investing and saving so that I can use this later down the line when I have some money saved away.
ReplyDeleteThis seems to me like something everyone should know. My grandparents never truly made any money themselves, but they invested very well. Making money doesn't have to be what you put work into, but can be you investing in other ventures. Money sitting doing nothing helps basically no one. Many people sit on their money, but this just shows what you could do with your money instead off letting it sit. I am letting mine sit, but I also don't have enough money to invest and make a difference. I hope to in the future.
ReplyDeleteI enjoyed this piece because I knew somethings that you touched on throughout this piece but I didn’t know about principal bonds and how they work. Also about the index fund. I never really looked in or heard about these options very much and how they work overall. This really helped open my eyes to other options and how we could use them in the future as most of us are going off to college soon and are then going to be in the workforce. This also made me think about saving and investing in better ways than the typical ways.
ReplyDeleteGriffin, I am pretty familiar with all these examples on how to make your money grow, but if I was not as familiar I would want you to elaborate more on how to do these things. I wanna know HOW I set up my index fund or HOW I put my money into bonds. Other than that I think your post made a lot of sense and is very relatable.
ReplyDeleteI really like how you provided specific examples and amounts as to the return percentage if we were to invest in these different methods, and proportionally how much money we would get from these investments in a year if we invest a million dollars. I didn’t know about a Municipal Bond before, and it’s very intriguing as it sounds like a risk-free way to invest your money and get a guaranteed return. I also knew a lot about the stock market, but only have a brief understanding of Index Funds, so learning more about what they are and how they work was very interesting, as I’m trying to evaluate what savings methods will be the best for me to pick when the time comes.
ReplyDeletenice job I really liked learning about all of this and a some of the many reasons to not put your money into the bank and for showing that the more money that you have kept the better you will have to invest in the future and eventually be able to live a good life and not be needing to worry about money at any point.
ReplyDeleteInvesting is a great way to actually do something with the money you just have sitting around.
ReplyDeleteThis is interesting and all but as students were all going to be in debt pretty soon and according to professional rich person Kevin O'leary one of the most foolish things a young hustler can do is try to invest while in debt. Is it worth it to invest all of this money when were all going to end up in debt anyway?
ReplyDeleteThis was an interesting piece about a very interesting topic to me personally. I find investing to be very interesting, however I agree with some of the comments in here. I think that investing while you are in debt is something that is way too risky for young people who most likely don't have a stable income yet. I think that getting out of debt needs to be people's first order of business and then once they get themselves out of debt, consider investing. The two shouldn't be going on simultaneously.
ReplyDeleteI specifically chose to read this post because I didn't think it was that harmful to leave your money sitting in the bank. This is a very important topic that everyone should be taught to make their money grow . The post was easy to understand especially with the specific examples included for each option.
ReplyDeleteI guess I never realized that you could make a stable living salary just by investing a million dollars, although the hard part is finding a million dollars once you have it its smooth sailing. I wonder how much you could make if you chose higher risk stocks and what about CD's.
ReplyDeleteI never though of those two ways, i though just keeping you money in the bank for interest was a good way to gain return on your money.This is some good information to know for the future.
ReplyDeleteThis was really great to read. As I'm sure is the same for many of us, I'd never heard of municipal bonds or index funds -- or at least knew very little about them -- so it was great to hear about they're purposes. Many of us probably find ourselves making savings accounts because it's what expected of us, but to find out there are other more beneficial options out there really frees up a lot of possibilities in our lives. If I were to ask one question it'd be: If we don't have enough money (like a million dollars, or even half a million) to spend on investments like these, are there any other opportunities that would help us save for investments?
ReplyDeleteI honestly have not thought much about it being harmful to leave my saved money in the bank so this was a good heads up. Learning about the municipal bond and index fund was very intriguing as well since I have never learned about that before. Getting to really understand those ways of saving money is beneficial for everyone.
ReplyDeleteIt's extremely important for others to know what options they have to invest and make money off of money. Despite knowing what these options are, how would someone go about accomplishing or deciding to do these? How does one give loans to the government?
ReplyDeleteI am interested in this because I want to put my money in something like what you are talking about. But with municipal bonds, do you get the money back after the bond is finished.
ReplyDeleteI never knew about municipal bonds and I find that that is a great way to gain money by not doing anything, but to really gain a good amount of money you need to loan a lot of money. I wonder when loaning this money is there a chance that whoever you laon this money to they won’t ever pay you back because whatever they spent that money on ended up failing and they have no money to give? What would happen in that situation? I want to earn money by sitting and watching it grow and I liked learning about the ways I can do that instead of letting it sit in a bank, well done.
ReplyDeleteI have never heard of a municipal bond! I think when people think investing, it's almost always stock market, and I have never considered other options before! I wonder how I would purchase a municipal bond since it does seem rather safe.
ReplyDeleteYour blog post was extremely interesting, before reading your blog, I had never heard of a municipal bond or an index fund. I was shocked when you said that a person could make a sustainable living just by investing their money in an index fund and these types of investments would help a person to retire early. For a high school student, how do you think that we could invest our money in ways that will help us gain more money? Although investing in a municipal bond or an index fund seems like a good idea, would it the rewards be valuable for a high school student? In my opinion, and my experience, I think at a high school age it is just easier to keep the money the bank for now and gain more money from working and interest rates.
ReplyDeleteDidn't know there were so many options when investing. The Municipal Bond sounds a lot more safer.
ReplyDeleteVery good blog. You had a lot of great and useful information on there. It was nice reading the different ways to do this and prevent doing this, because some people have or will end up doing this.
ReplyDeleteI appreciate how you suggested multiple ways someone can increase their finances, and the importance of doing so. However, I would've liked it if you were to go a little more in depth with the topic, because it would improve my understanding of why you can use things like municipal bond or an index fund. Maybe it would be more impactful if you were to talk about why these options are available? What do these options do for society? Overall, a good article though. I had never heard of a municipal bond or an index fund before reading this.
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