Do Nothing To Earn $2500 A Year. Not A Clickbait
And How To Compound It
As we all are aware “ A penny you save is a penny you earn”. So this is what I learned about how to earn money while doing nothing. Let me tell you.
An average American spends about $1100 on coffee every year. But many of us just don’t realize it. Coffee has become our lifestyle. So, if we stop drinking coffee which is also good for health, we’ll save around or even above $1100 every year.
Similarly, we spend $1200 on an average in a year on fast food which is obviously not good for health. So if we stop eating fast food then we’d save a big buck in food expenses too.
Therefore we could approximately save around $2500 every year. Of course for an American, it may not sound like a big amount but wonder what you could do with it. You could invest it and gain returns every year, it’s like a passive income. When you keep on adding $2500 every year to your investment portfolio it becomes huge due to the compound effect
Let me tell you the power of compounding with a simple example. If I give you two options to choose from, which one would you choose? $5 million instantly or $1 which get doubled every day for 30 days. Obviously, you’d choose $5 million right, but you know what $1 dollar will give you more gains at the end of the 30th day. Yes, even during the 25th day the compounded $1 would be around 2 million dollars but on day thirty, it’d have been compounded to around $53 million.
Unbelievable right, but that’s the power of compounding. But to see the result you’ll need patience.
Okay now that I’ve told you the power of the compound effect. So, now I’ll tell you the ways that you could invest.
1. Index Funds/Mutual Funds
This is the best way to invest for newbies. And also the safest too. The money you invest is split and invested into several other companies so that if few companies have losses, the others will still manage to provide returns. So if you know nothing about the stock market, you could invest in Index/Mutual funds. I personally recommend this for beginners and also to others too.
For Americans, you could try the S&P 500 which is a type of Index fund that invests in the top 500 companies registered in the United States.
You get about 8 to 10 percent returns every year, so if you invest $2500 every year then you gain more than $200 every year, which may seem less but remember about compounding. You could just put the saved money in it and forget about it. Imagine the gains after 20 or 30 years. It’s fascinating right?
2. Stock Market
If you are really thorough about the stock market, then you can go for it. Invest in the stocks that you believe in. Again it’ll give you good returns if you choose the stocks wisely.
You can also do trading but be very careful, I suggest this to people having at least having 5 years of experience in the stock market. It gives you between 40 and 60 percent returns. Don’t be fooled by the scammy youtube videos or blog posts.
All of this is at your own risk and I don’t emphasize it.
3. Cryptocurrency
This is what gives you high returns and is also a very risky investment. There are crypto’s that give 1000 or even 2000 percent returns. But can also give you huge losses. I suggest you analyze the market well before you invest, choose wisely.
I am just telling you about the options and do not emphasize them. All investments you make are at your own risk.
4. Real Estate
Real Estate is another good option. The population is growing and the need for properties will never reduce, so I guess real estate is a pretty good option.
All of these are great investments but I repeat, it is at your own risk.
You could also diversify your investment portfolio and invest in all of them. Don’t forget by investing in stocks, you get gains along with the companies’ profits. So it’s a win-win.
So, you see just by cutting out two unwanted expenses, you could earn so much. So figure out all of your unwanted expenses to create a passive income stream.
