3 Practical Ways to Grow your Money: Revealed by a Software Engineer

Photo by Daniel Öberg on Unsplash

In my last three years, I’ve stopped thinking about saving money and started working on growing it. Well, this began after reading a lot of books, online blogs and talking to brilliant people around me who have multiple passive sources of income.

In this post, I’ll present real actions that I’ve taken to grow my money and give insights about what worked and what didn’t work for me.

Disclaimer: At no point, I’m giving you financial advice. Please talk to your financial advisor or do your research before making any financial decision.

There are only three possible ways one can grow money.

1. By investing Time.
2. By investing Money.
3. By saving Money. (Don’t forget to check this section to find out how I save money on monthly groceries and other regular purchases without effecting my lifestyle.)

Investing Time

Investing time is very simple and straight forward. If I work more, then I earn more. But I knew I have limited time every day. I can’t rely on it for massive immediate income. However, even if it is not massive, it is some money that I can get on top of my monthly salary.

How much time do I invest?
On top of my regular job, I invest one extra hour per weekday and four total hours over a weekend, and I get 9 hours each week. ~ 39 hours each month ~ 468 hours each year.

Where do I invest this time?
I invest extra time on the following three things:

1. Freelance projects: I work on various freelancing projects from time to time, and I spend a portion of my extra time (approx. 100 hours a year) on the projects that pay me by the hour. My hourly rate varies from $40 — $70 per hour and considering $50 as an average; I earn about $5,000 ($50 * 100 hours) extra every year.
2. Upskilling myself: Well, a lot of new skills comes by working on freelance projects, but yet I spend approx. 50 hours per year on learning new skills that can help me grow in my career. This time doesn’t give an immediate return but helps me to get a salary hike in my current job or when I switch company. Real numbers, my salary almost doubled in the last three years.
3. Building my Startup: It’s work-in-progress. But someday I want to be an entrepreneur. I invest my remaining time working on various ideas, teams and market research. At present, I’ve not launched any product or company and have not made any profits. I’ll update the post when I do.

Investing Money

Investing money can be rewarding but can feel very complicated and risky. There are so many online posts, youtube videos and books on money investment, yet not everyone is into it.
For one, the most significant hurdles could be deciding the amount of money to invest, right channels/assets to invest money in and analysing the risks involved.

I’ll answer all the questions shortly, but before I do that, one very very important tip/suggestion that you should always remember.

When you invest money, don’t look at the total profit in whole numbers. Calculate the percentage of profit you made on investment and especially in how much time. I’m saying again, ALWAYS make sure you see profits in the percentage, not the whole numbers.

Let’s take an example. Imagine you invested $1,000 on something and you made $10 profit in one week. Don’t count your profit at $10. Tell yourself; you made a 1% profit on your $1,000 investment in one week. Further, if you make a similar profit on this $1,000 investment, then you could potentially make a 52% profit in one year.

How much money do I invest?
The day I get my salary, 10% of that amount goes into a different account immediately for investment without a single thought. After looking at the success, I’m planning to increase the regular investment amount. But at present, I’ve more things to take care of like the home loan. So the money that I don’t keep aside for investment remains in the home loan offset account to get benefits on home loan interests.

Where do I invest my money, and what are the returns so far?
Before we go into the below points, let’s assume every month I’m spending $1,000. This assumption will help you to understand the examples. However, it doesn’t matter how much money you put in because the profit/loss will be in percentages.
P.S: I didn’t reveal the actual amount I invest, so I don’t disclose my salary on Medium. I hope that’s fine.

1. ETFs (Exchange-traded funds) (20% of my total investment, i.e. $200 per month): I invest in Spaceship universe portfolio. Spaceship is a company that manages ETF like funds for handpicked companies they believe are less likely to be disrupted, and their Spaceship Universe Portfolio lets you invest in them. I started with a $1,000 initial deposit and then a fixed amount $46 per week. So far even after COVID months of poor market performance, my investment is at 10% profit in 6 months. You can invest in any ETFs you like but make sure you do a regular investment instead of a one-time fix investment. That is the key. Also, I prefer weekly or twice a week because it helps you to lower the risk by buying stock units at a different price, considering the stock price goes up and down multiple times. If you choose to signup at https://www.spaceshipinvest.com.au/invest/universe then use my referral code S8WRR2XNE8 to get $5 free credit after signup.
2. Stock market (50% of my total investment): Well, I don’t know much about the stock markets, and I’m not a financial analyst or expert. I go where the world goes, and I take small profits when the opportunity comes. To make sure I don’t do stupid things, I look for professional recommendations/tips from companies like Morningstar premium, Goldman Sachs, & Consensus. Their recommendation generally works, especially when you compare recommendations from three different companies. So far, I’ve made above 25% profit buying/selling various stocks, and only one of my stock purchase is in the loss. That one also I haven’t sold yet, so the loss is only when I sell them until I don’t it’s an investment. I invest in equities of companies with a large market cap (like big banks, telecoms). Usually, If I want to buy stocks of a company worth $3,000, then I do it in three different transactions/trades of $1,000 each to reduce the risk. For example, if I decide to buy stocks of ANZ bank, then I make the first transaction and then observe how the price moves (up or down and how much). If it moves down a lot like more than 4–5%, then I do another purchase transaction and again similar. However, if it moves up and I can get a profit above 1%, within one week, then I sell. So if you notice what I do is, aim for 1% profit or closer in a week which makes my annual profit at 52%. Isn’t that good? Well, it is good, but not all the money is invested all the time. So do proper calculations. However, one thing is for sure; the total percentage will be much higher than regular saving bank interests. On top, I get dividends from long term stock investments as well. Yes, I do keep some investments for longer-term. Again the recommendations, past history of the stock performance, dividend history etc. help to decide which one are better.
3. Small real-estate investments (starting from $50) (10% of my total investment): Buying an investment property may not be for everyone as it’s a huge commitment. At the moment, I buy small portions of the investment property and spend 10% of my total investment (i.e. $100) on it. Brickx is the company that lets me buy a small portion of properties, and I earn rent on my investment and also can have capital gains when I sell the bricks. I’m also planning to buy real investment properties in future and explore negative gearing to save some taxes.
4. Extra money in super (10% of my total investment): Super (retirement fund) in Australia is taxed at a much lower rate than the current tax bracket as per my salary. I put 10% of my total investment as voluntary super contributions to save tax. In the long term, I plan to manage my super myself using SMSF (self-managed super fund). SMSF lets you invest the super in investment properties, stocks of your choice, and much more, which is very powerful but very dangerous if you don’t know what you’re doing.
5. Personal training/learning (10% of my total investment): There is nothing better than learning new skills and upskilling yourself. As I mentioned earlier, I invest time in upskilling; I also invest money in upskilling. The money could be spent on buying course, tool, or attending conferences, events etc.

Saving money

Saving money is tricky. I didn’t want to compromise my lifestyle. So the big question was, how can I save money living the same lifestyle?
To understand how much I save and how, you need to know a bit more about me, my dependants and lifestyle.

I’m married, have my own home with a loan, and the only person who earns. My wife worked last year but not full-time. I get either my parents or in-laws visiting multiple times in a year, and I pay all of their expenses, including travel, food and leisure. So most of the time, I have two adult dependents, home loan, and groceries, utilities, insurance and other expenses.

I track all expenses using my own custom excel sheets and automated scripts. From my last year’s expenses sheets, I spent the following:

Expenses (before saving): Total = $45,842 (excluding home loan payments)
Breakdown
New Furniture/house stuff = $16,547
Food & Grocery = $11,431
Travel = $6,920
Utilities = $3,687
Insurances = $2,592
Personal = $2,500
Misc = $2,165

Expenses (after saving): Total = $43,518 (Saving of $2,324 i.e. 5.07%)
Breakdown
Furniture = $15,469 (saved $1,078)
Food & Grocery = $10,860 (saved $571)
Travel = $6,685 (saved $235)
Utilities = $3,247 (saved $440)
Insurances = $2,592
Personal = $2,500
Misc = $2,165

Alright, let’s come to the point. How did the above numbers change?

1. Bought discount gift cards. With my insurance, I got access to a rewards platform where I can purchase gift vouchers of popular brands at discounted prices (from 3% to 25%). The best part is, most of the brands where I shop like Woolworths, Coles, Target, JB HI-FI, Amat, Good guys, Myer, Caltex, Uber, Hoyts cinema etc. are available there. This similar platform is available in Australia through multiple channels like Suncorp Rewards if you have an account with Suncorp Bank, or use service from GIO, Aami, Bingle, Shannons, AGL etc. I saved a flat 5% on food and groceries, petrol. For furniture, I saved from 5% to 8% depending on the store. For airlines, I saved 2% on ticket purchase. Maybe these platforms are not available in your country but find out which one is. What I’m trying to say is do the research and find out how you can get discounts at brands where you shop and save 3% to 25% money.
2. Bought in bulk, especially the packed grocery items which I use regularly. Buying in bulk saves money not just on the product but also on travel cost for me to go to the store multiple times and also saves my precious time which I can invest somewhere else. The amount of money I saved buying packed groceries in bulk is not included in the above calculations. Try this and don’t forget to check the expiry dates.
3. Compare product prices at multiple stores. For utilities, I got flat $100 credit on both electricity and gas when I switched to a different provider without effecting the fares and $240 saving after switching my internet, and telecom provider. I recommend you compare the fares regularly (3 months generally) to check if you’re getting the right price.
4. I also changed all of my house lightings to LED to save cost on electricity bills. The best part is in Victoria; the government replace the non-LED lights for free. So without spending any money, my electricity bill has gone down.

I hope all of the above points helps you to decide what’s better for you and you make a plan to grow your money.

Feel free to ask questions, or share your thoughts, or your own ideas in comments. I would love to talk to you and share my experiences.

Good luck. :)