Building a net worth of a millionaire in five years might seem like a pipe dream, but with the right type of investments, it’s more feasible than you might imagine. Getting started doesn’t require a finance degree or a six-figure income, but it does take effort, discipline, and smart decision-making. The trick is to pick simple investment opportunities and stay committed to them.
This article explores investments anyone can make, no matter where you’re at, and breaks down the options that work. These ideas—from side hustles to stock portfolios—won’t need a lot of money upfront and you can start them on your way to quite significant financial growth over time.
Create a High Yield Savings Account
A high-yield savings account is still an easy way to get started if you’re not quite ready to dive right into the stock market. Traditional savings accounts don’t come close to the interest rates these accounts offer, allowing your money to grow without a single finger lifted. It’s now easier than ever to make passive income on your savings by taking advantage of the many online banks that offer competitive rates.
Develop a Side Hustle
One of the fastest ways to make more money is with a side hustle. Whatever you are doing to generate the extra earnings, say freelancing, selling products online, or tutoring, the extra money can be channeled into other investments. More than a third (nearly 37 percent) of Americans have a side hustle, according to a recent study by Bankrate, and many of them make more than $500 a month.
Contribute to a Roth IRA
Roth IRAs are incredible tax advantages for retirement savings. It’s technically a retirement account, but the compounded growth can add up pretty quickly if you park the maximum contribution annually. Second, withdrawals in retirement are tax-free, which is a future gift to myself compounded by time.
Buy Rental Property
Long known as one of the most reliable paths to wealth, real estate has been around for many years. If you have the initial capital to buy a rental property, the potential for long-term gains is massive. Buying a whole property can seem out of reach, so house hacking is where you live in one unit and rent out the others to cover your mortgage.
Flip Products Online
Buying items on a discount and reselling them online can end up making you money. Selling items on Platforms like eBay, Amazon, Facebook Marketplace, or elsewhere makes selling garage-sale finds or wholesale goods fast and easy.
Buy Exchange Traded Funds (ETFs)
Index funds and ETFs are similar, but ETFs operate in much the same manner as regular stocks. Often, they have lower fees than mutual funds, and they’re highly flexible. Since ETFs already offer instant diversification, they make for a good way for beginners to dip a toe in with some investing without taking on too much risk.
Invest in Yourself
Some of the best returns you can get on spending money are for education, certifications, or skill building. Knowing these skills always improves your employability, making you more likely to get a promotion, find another job, or even start a business. According to a 2020 LinkedIn report, professionals who put money into learning new skills were more likely to land a raise within a year.
Automate Your Investments
Apps like Acorns or Betterment allow you to automate that process, making the growth of your wealth as easy as setting it and forgetting it. These platforms round up purchases so you invest the spare change into diversified portfolios. These small contributions can break up into big savings over a time.
Start a Small Business
There has never been a better time to start your own business if you’ve ever desired to do so. Businesses always have exponential earning potential: a niche product, a consulting service, a food truck. Although success isn’t guaranteed, with the right planning and persistence, you can achieve financial freedom sooner than you think!
Invest in Dividend Stocks
The best way to create an income stream for growing your investment is with dividend stocks. With time, companies with a history of paying dividends will pay, thus giving you extra cash to reinvest or to keep as savings. This compounding effect — over time — can make for huge returns.
Explore Peer-to-Peer Lending
There are peer-to-peer lending platforms, such as LendingClub or Prosper, where you can actually lend money to the people who need it, thereby cutting out the banks. Instead, you pay interest on your loan. When you diversify your loans amongst multiple borrowers, the risk is rarely sky-high, but the returns can be pretty solid.
Real Estate Crowdfunding
Through platforms like Fundrise, you can invest in real estate without having the large upfront costs required. You are able to own a share of an apartment complex or commercial building by pooling funds with other investors. Unlike others, these platforms pay out dividends that give you regular returns while your investments gain value.
Invest in Index Funds
They are index funds beloved by financial experts for their simplicity and reliability. If you pool your money into a collection of stocks or bonds, you spread your risk while keeping costs low. A Vanguard study concluded that indexes have performed better than actively managed funds 90 percent of the time over 15 years. For hands-off investors who need only steady growth, they are a great idea.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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