credit: Freedigitalphotos.net by Scott Chan
Last week, I was at a birthday party for my friend’s 3 year old child. It was a group of guys that I’ve know since college, and now we’re all working professionals in the stage of our lives where we’re married and have young children. One friend said that the income from his day job just wasn’t going to cut it. He wanted to make more. Now he wasn’t saying that they couldn’t make ends meet. I think he earns a good salary, it’s just tough living in NYC with a family. Plus, they recently became a one-income family and they are thinking about moving since they live in a 2-bedroom condo with two kids. So the topic of make money in ventures outside of our primary job came up. Here are the ideas that were discussed:
Stocks
I think investing in stocks is one of the best ways to make your money work for you. My friends talked about the money they’ve made investing in stocks such as Apple, Tesla, and in 3-D Printing companies, among others. I joined in the conversation about buying stocks as I have a small amount in individual stocks. But I really think that index investing is the best bet. Basically, I love the low costs, simplicity and often superior returns. For more of my thoughts on index investing, read Why Invest in Index Funds? and When Being Cheap and Lazy is Better. However, if you are also interested in investing in individual stocks, check out Bryan’s blog Income Surfer, who provides a great resource regarding investing in stocks. My friends weren’t too fond of index investing and think they have a better shot at higher returns investing by themselves. I’ll stick with index funds for the bulk of my money, and satisfy my “I can get higher returns” side by investing a small portion in individual stocks.
Real Estate
My friend said that he was considering investing in real property in New York City. In the last few years, the housing prices in NYC have increased substantially. There’s a mindset with many I know, that there will always be a high demand for property in NYC so it will always be a good investment. I’m not sure about that, but that is the prevailing mindset of many. As housing prices have skyrocketed, my friend is thinking about buying in neighborhoods that are “up and coming” or prospective neighborhoods that might see growth in the future. The highly sought after areas like Williamsburg, DUMBO in Brooklyn, and Long Island City in Queens were once mainly factories and warehouses…not neighborhoods people pay big money to move to. It’s an interesting idea, but I’m not sure I have the money or the risk tolerance to try this plan. I have recently thought about buying property in lower cost areas, such as Western New York where my wife went to school and where my brother-in-law still resides, and renting it out. It’s just a thought for now though, and I’ll definitely need to learn more about investing in real estate and in being a landlord. Dave from The New York Budget just wrote about investing in a turnkey property, which is pretty awesome since I might look into doing that in the future.
To learn more about investing in real estate, definitely check out:
FI Fighter
No Nonsense Landlord
Peer-to-Peer Lending
I invest a small amount of money in Lending Club, a peer-to-peer lending platform, where investors like you and me can provide micro loans (as small as $25) that get pooled together for someone that needs the loan. The borrowers pay interest rates depending on various factors such as their creditworthiness, and Lending Club charges a small fee of 1% for the service. Currently, according to Lending Club, my net annualized return is 7.4%, which is great compared to a savings account, but not as great when compared to stocks. As I mentioned earlier, I only invest a small amount of money, as I’m not sure it’s the best place for my money when considering the risks and returns.
Online Blog/Store
Back in 2006, my friend, who was also at the party, and I decided to try and make some money from the internet. We didn’t really know what we were doing, which resulted in us quitting. That was pretty unfortunate since I keep hearing that it was much easier to make money blogging back then. We started various websites and an eBay store. In any case, AdSense sent me a check for $25 about a year ago since our AdSense account had been inactive for such a long time. It is one of the reasons which motivated me to start a blog. I haven’t yet learned how to monetize property though, as I don’t even have $25 in my AdSense account. Sam from Frugaling posted that he made $35,000 during his first year blogging so it can be done. For a quick rundown on how to make money blogging, check out DC’s post on Young Adult Money entitled 5 Ways to Make Money Blogging. Steve from My Wife Quit Her Job has a great blog and online course for those who want to start an online business.
Education
Invest in yourself. A friend of mine is not happy with his current position and salary. He plans on acquiring some marketable skills to increase his salary. You don’t necessarily have to quit your job to acquire new skills, as it’s possible to learn new skills online.
Forex Trading (Currency trading)
One of my friends mentioned this investment option, but I’m not sure I would recommend it. He works in that field and says he has done well in investing in currency markets. It seems pretty volatile though. However, you can open a free practice account if you are interested.
So what are you investing in?
Thanks for the shoutout! I am very excited about my recent turnkey adventure. I’m also planning on dabbling in both the niche site and iphone app spaces as well. More to come! I do some investing in Lending Club as well as a large amount of investing in Vanguard Index funds.
Hopefully in about a year, I will have a WHOLE bunch of data about all of these projects (both in terms of income and enjoyment) and I’ll be able to move forward with whichever strategies fit me best (I have a feeling that index investing will always be a frontrunner for me).
Dave @ recently posted…5 Ways to Earn More in NYC
Wow, you have a lot of projects lined up. I’ve also thought about a niche site, but I’m not sure if it’ll work. Plus, I have a hard enough time keeping up with this blog that I don’t know if I can handle another one. Iphone app sounds very interesting, but I’m not technologically inclined…my friend is a computer programmer and was taking a course for creating/building apps.
I hope to invest in index funds eventually. It’s one of those things that I keep thinking about, but haven’t set anything aside for yet. I’m amazed by people like Sam who can make so much from a blog. My Adsense account is slowly building, but who knows when I’ll reach the payment threshold!
Lauren recently posted…My Healthy (and cheap!) Obsession
You should Lauren! Start investing even if it’s a small amount. I’ve been meaning to learn more about monetization but haven’t had the time. Plus, I really need to post more consistently if I want to have more traffic!
Honored to be included! You’ll get there. 🙂
Blogging income is a fickle friend. Hah. Keep at it, though.
Sam
Thanks for the encouragement Sam!
As far as stocks, I am definitely a fan of the “boring” approach and prefer to invest in diversified ETFs. As of right now, I am investing a good deal of money on my business, because I tell people that I would go all-in on “me” because I know my performance track record, results and future potential, so it is an investment I feel really comfortable in.
Shannon @ Financially Blonde recently posted…Music Mondays – Compass
Yes, investing in yourself and your business is as sure of a bet as there can be and I’m sure you’ll reap the rewards.
I’m all for the index funds and rental properties, but real estate is still really cheap here. I know people who live in high cost areas who rent and own rental property somewhere else. I think it can work well if you get a good property manager and good tenants, but there is obviously more risk than if you live there and can check up on things.
I know…I wish real estate was more affordable where I live. I’d be interested to hear more about those who live in high cost areas and own rental property somewhere else. A good property manager is key, but then you’d have to pay for one rather than taking care of things yourself. It is definitely something I’ve been considering lately.
I’ve been looking into fx! Might have to try a practice account. Are the stocks they invested in dividend… Apple, Tesla etc? That could be a way for his family to get money now rather than in retirement.
femmefrugality recently posted…Making the Switch: How I’m Saving $100+ Every Month on My Cell Phone Bill
Really?! Let me know how it goes if you try it. I think there are some free e-books available regarding fx. I think my friends are more interested in growth stocks rather than dividend paying stocks.
Ah gotcha. I will let you know! Might not make it past the practice round depending on how it goes. Read a few books, but….
femmefrugality recently posted…Making the Switch: How I’m Saving $100+ Every Month on My Cell Phone Bill
Wow, thanks for the shoutout! I don’t know that my site deserves the complement, but thank you! We’ve all be in those situations. I love to hear what everyone is doing. I agree with you about index investing, and think it’s probably the best approach for most people. If an investor doesn’t have the time or interest to do the investing homework…..it’s better to set it and forget it…..in a low cost INDEX FUND.
-Bryan
Income Surfer recently posted…Free Monthly Newsletter Launch
No problem Bryan, I like your analysis on different stocks and the market…plus you don’t disparage index funds while many bloggers who write about investing in stocks usually do.
So many ways to make money, but the easiest and quickest would be to use skills to teach others. I know of a tennis instructor who meets teenagers in the local park for lessons @ $30-40 dollars an hour. Can you share what the highest paying index fund pays in dividends per 1,000? Because for a high yielding stock like AT&T that pays 5%, if you were to invest 25 grand today it would only provide 1,315 dollars a year. Definitely not enough to supplement an income, but it could provide about half the groceries for the year.
EL @ MoneyWatch101 recently posted…My Dividend Strategy
Hmm…can’t really think of any skills I have that I can teach others! I don’t know what the highest paying index fund pays in dividends, the index fund just tracks an index and it’s possible that some of the stocks offer a dividend. Dividend paying stocks are fine, but I’m also fine with stocks not paying them…I’m more interested in value/growth stocks.
This is a great article! I totally agree about index funds (thanks for the mention by the way). Considering the fees, the returns and the risks, index funds are a great approach. Especially for retirement investing. I think the real estate ideas mentioned did seem a little risky like you said. I am a big fan of peer-to-peer investing too! I think it’s great. I’m going to check out Income Surfer too. Thanks again! Great post!
Kalen @ MoneyMiniBlog recently posted…6 Ways to Cut Costs on Cooling Your Home This Summer
Thanks Kalen. I’m glad that I find more and more people who are fans of index funds. It’s almost something you can set and forget…freeing up time to look into other investment ideas. I’ve really been thinking about real estate…just not where I live since it’s too expensive. But buying property where you don’t live probably adds even more risk. We’ll see.
Thank you for touching on “investing in yourself.” This is probably the best way to increase income, acquiring the skills necessary to move up. Yes, cutting expenses is great but that only goes so far. Our careers are the #1 wealth creation mechanism we have. My wife invested three years of her life to transition from teacher to CPA. Now she is making double what she was. Why do so many people overlook this option?
Brian @ Luke1428 recently posted…Why I’m So Excited to Spend Money Again on Cable TV
Great points Brian! I guess a lot of people overlook it because it’s an option that usually takes a big time commitment and work. After graduating college and working a year, I decided to go to law school part time while working…it was tough but I think it has been worth it.
We mostly invest in stocks and mutual funds. We also own two residential real estate rentals. Those are investments I feel like I understand and feel comfortable with so that’s what we stick with.
Holly@ClubThrifty recently posted…Joint Birthday Parties: Our Frugal Birthday Party Strategy
I hear Indianapolis is a great place to own rental property!
Great rundown Andrew! We’re investing largely through the stock market and growing our business. I heard the “boring” argument against index funds all the time in my brokerage days, though I’ll take boring any day when it comes to investing. We’re largely in index funds a couple of solid dividend payers and a very, very small part is more speculative. We’d love to get into real estate, but with the business we just don’t have the time right now.
John @ Wise Dollar recently posted…4 Tips for the Most Productive Vegetable Garden
Thanks John! Index funds are simple, easy and have low costs…if that’s boring, sign me up! I’m sure it’s busy running a business…since I’m a 9-5 employee I should have more time to look into other ways to earn money. I’m really looking into real estate.
Great post…isn’t it funny to watch as you and all of your friends grow up? Personally, I reinvest a lot of my earnings right into my business. I may invest in a sales team, fulfillment team, or tools for one side or another, but the investments seem to work out pretty well!
Joshua Rodriguez @ CNAFinance.com recently posted…Debt Free In 2017…Our 3 Year Plan
Yes, time flies…one day, we’re trying to get into the trendiest bar/lounge and the next day, we’re trying to get our kids into the best schools! Reinvesting your earnings into your business is a good idea…would love to hear more about your business.
I’m an open book Andrew, if you’ve got any questions, drop me a line. In short, I run a content marketing agency, the blog you know and love…CNA Finance, as well as a few other niche websites. All together, it makes for a pretty profitable umbrella corp.
Joshua Rodriguez @ CNAFinance.com recently posted…I Finally Met Jeremy From Modest Money
I often forget that education is an investment. Sometimes it is hard to look past the burden of paying for school. But on a general note, you do get a return from it. I think the more you put in, the more you get out. I am really considering going back to school for a master’s degree. My big hold up right now is deciding whether or not I really want to pay for it.
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Paying for school is definitely a burden, although there are ways to minimize costs. It was tough but I went to school part time in the evening while continuing to work. It might not work for everyone’s schedule though. And you can also gain skills without return for a degree. Also, is it possible to find an employer that offers tuition reimbursement?
I invest in almost all of the above. I have some index funds, I have some stocks, I have a little in peer to peer. I rent out 2 rooms in my house so I am a landlord.
I don’t contribute to my education anymore, at this point work experience is more valuable than anything else, and I’ve never done forex trading.
My blog seems like a terrible investment at the moment. I have put a lot of time and effort into it but have yet to get any money from google adsense. I also can’t really get any affiliate links because my site is probably just too small at this point. I hope to one day cover my cable bill. I know that some people can make a living off of their blogs, but if I could just consistently cover one bill I would be pretty stoked. I imagine it will take me another year or so to get to that point but we’ll see.
Zee @ Work-To-Not-Work recently posted…The Power of No
Yep, sometimes work experience trumps education. I probably should have clarified and said investing in yourself by continuing to acquire skills whether by schooling or work experience and not limit it to “education.” My blog also hasn’t been a great investment financially speaking but I’ve definitely learned a lot from fellow bloggers and it definitely has been worth it. Would still be nice if the blog can cover its own costs though.
Our family is currently growing our money through stocks (single stocks, mutual funds, and ETFs). We also discovered Peer-to-Peer lending a few years ago and in todays low interest rate environment, I think we have found a replacement for laddering CDs.
As for blogging, I think there is a real opportunity to monetize our blog but I am trying to not put any pressure on myself to do so. It would obviously be a nice income stream but I don’t want to feel disappointment if the blog doesn’t take off. For now, I’ll just enjoy the interaction and sense of community. 🙂
A Frugal Family’s Journey recently posted…Dividend Stocks Portfolio (Update) – June 2014
I’ve thought about peer-to-peer lending as a replacement for CDs and savings accounts, but sometimes I wonder if it is really comparable since the risks are very different. The interaction and sense of community really has been great. If it wasn’t for that, I wouldn’t be doing it since I haven’t made any money.
Thanks for mentioning my post about how to make money blogging! While I wouldn’t say I invest in my blog per se (unless you count time, or re-investing money that I made from the blog), I do know others who buy up blogs and turn them into passive income. In fact I know someone who owns at least 5, maybe more now, and doesn’t write on them. ever. He also doesn’t manage them. He essentially invested in established blogs and takes passive income from it each month after the writer and manager are paid.
DC @ Young Adult Money recently posted…What’s the Most Cost Effective Trip: Cruise, Road Trip, or Plane?
That’s true, since it’s more of a job than passive income. I’ve heard of some who buy up blogs and have it run kind of on autopilot. That would be cool, though I do enjoy the interaction and community, as well as writing my thoughts in my posts. Though I need to be more consistent in posting.
You guys seem to have the same investment bents as we do, Andrew, Index investing, and real estate investing as long as it’s not too risky. We aren’t doing any investing yet, except for our retirement stuff, but we are planning now for what we’ll be doing once the debt is gone.
Laurie @thefrugalfarmer recently posted…Great Fathers Day Gift Ideas
Hey, saving for retirement is still investing! I’m hoping to ramp up my saving/investing soon too.
Dave’s turnkey post really got me thinking too. I’d been pondering buying in Nashville, Charlotte or Atlanta instead of NYC, but it would take a big chunk of my savings to take that risk. P2P lending is what’s really got my curiosity right now. Would you branch out into another one, ie: Prosper, or just stick with Lending Club?
Broke Millennial recently posted…When to Take the Upsell
I’ve heard that Nashville and Charlotte are great locations for turnkey properties. I’ve thought about Western NY because of the price and because it’s somewhat nearby and I know someone there. You went to school upstate right…you think it’ll be a decent location? I’m sticking with Lending Club…seems like the same thing, except when I started it looked like Lending Club was doing a better job of screening borrowers. I think Prosper worked out the kinks, but I don’t see the point in having 2 peer to peer accounts.
I’m the same as you when it comes to index funds and P2P lending. I’m a huge Elon Musk fan, though, so if I ever do get brave enough to invest in actual stocks, his companies are probably going to be the first ones.
anna recently posted…You Know What’s Awesome Part 3
Yea Elon Musk is a pretty innovative guy and I’d probably like to invest in the things he’s involved with.
Right now I’m only investing in mutual funds… boring I know, but I need to take care of other things first before jumping into more risky investments. My fiancee is really good with money and now she’s investing in peer-to-peer lending and a few stocks. Some of her stocks are doing okay, while others are doing not so good.
Aldo @ MDN recently posted…Our Trip to Boston
Boring is good! Sometimes, the more boring the better like index funds. I’m not sure jumping into riskier investments is always the best idea. Peer-to-peer lending is interesting but index or low cost mutual funds are #1 in my book. And with owning a few individual stocks, you lose diversification. I own individual stocks but the bulk of my investment is in index funds.
My wife and I go with the Boglehead philosophy of invest often in low-cost passive index funds. You can get the most diversity at very low cost by investing in the Vanguard Total US stock market, Total international market, and Total bond market, with assets divided among the funds for the risk you can afford to take.
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I’m a “Boglehead” myself! I haven’t had much time to go to the boglehead forum much these days though.
Thanks for the shout out!
I am mainly in real estate, and have 24 rental units. About 1.3M+ in equity. I also have a significant amount in ETF funds, about $1M in various allocations, including cash.
I am looking for a few more investment things. I took a lot of trading classes, but trading is a but more difficult. I do like it though.
No Nonsense Landlord recently posted…How to Collect Rent On Time
No problem! I’d like to get into real estate and apply your strategies but it’s too expensive here in NYC. Maybe in the future though. Wow, 24 units…pretty impressive. Do you have another job or is managing all those properties your full time job?
Never did P2P as I think that is overrated. Real estate and stocks is my thing. Once my solar loan pays off I’ll look at turnkey rentals.
charles@gettingarichlife.com recently posted…Are You Getting Paid What You’re Worth?
I agree with your assessment of P2P…I have a small amount in it though. I’d definitely be interesting in learning about turnkey rentals.
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