The smarter ways to grow your money in the US

To keep your freedom as an immigrant in the United States, you must excel at two things. The first is knowing how to manage money, and the second is knowing how to keep your legal position.
6 min to read

Did you know that the 14th of August is recognized as National Financial Awareness Day? With that in mind, here are some tips and tactics to help you grow your finances and comprehend financial concepts!

To keep your freedom as an immigrant in the United States, you must excel at two things. The first is knowing how to manage money, and the second is knowing how to keep your legal position.

The two major strategies you need to be good at managing your finances are a) cutting down unnecessary expenses. b) growing what you have. Keeping that in mind, today, our topic of discussion is growing your money or investing. If you don’t know, you will lose it if you don’t grow your money since inflation devalues cash by 2% per year.

Returning to the main topic, There are two ways money can grow. One is by debt; another one is by equity. Say you have 1000 dollars and your friend needs it. You can either choose to lend him that money and get interested in it. Or your friend can start a business, and you can be a shareholder in it. The first way is debt-based, and the second way is an equity-based investment. The main advantage of debt-based investment is that it is safe. Even if your friend loses everything, he must pay you back the debt he took from you with interest. The main advantage of equity-based money is that you can make more profit, but you can also lose your principal money (for example, if your friend’s business fails). In short, the ultimate rule of investing is that the more the risk, the more chances of you making a high profit.

Now that we’ve covered the theoretical basics, let’s dive into all we have gathered in the last three years of investing.

Debt-based Investment:

  • Savings Account:
  • The safest way to keep your money is in a savings account. You’re putting your money in a bank, so put it in savings rather than checking. In our opinion, Ally and Barclays are the two most excellent savings accounts. Both provide excellent savings account interest rates (1.15 percent). We prefer Ally more because they refund your ATM fees regardless of whatever ATM you use in the United States. However, due to its low profit, savings are not a highly successful kind of investment.
  • Certificate of Deposits/bonds:
  • Certificates of Deposits are almost like bonds. They provide better interest rates than savings accounts. However, you must lock your money for a longer time (typically 3-5 years) if you want the real interest to mature. The best CDs that we have discovered are  Discover and Synchrony Bank.
  • Peer to Peer:
  • If you’re looking for a way to invest in debt, this is the way. In the case of peer-to-peer, instead of lending money to a bank, you’re effectively lending money to individuals. Our favorite one would be Lending Club, and you get a $150 signup boss if you join using this link. The average net annualized return is around 5–7%. You can also try Prosper, which is another popular alternative.

Equity-based Investment

  • Common Stocks:
  • You can make the most amount of money (or lose the most, remember high-risk high gain) through investing in common stocks, colloquially known as the stock market. Investing prudently in the stock market requires higher than average knowledge of how investing in general works. You can try brushing up on some basics through Investopedia to learn more.
  • Going into detail about this subject is beyond the scope of this blog. So today, we will focus only on one of the most popular types of common stocks, called ETFs or Exchange Traded Funds. In layman’s terms, ETFs are like a collection of individual company stocks, bonds, etc. In comparison to particular company stock, say Facebook (FB) or Google (GOOGL), we can also call them indexes. So there can be technology ETFs that mash-up technology company indices, financial sector ETFs, etc.  If anyone is new to investing in the stock market, I suggest going slow and going with standard/popular ETFs with lower gains.
  • To start investing in small numbers as a student, the best is the Robinhood app. It’s easy to create and has no trading fees for buying and selling stocks.
  • Automatic Managed Funds (Robo Adviser):
  • Managed funds are a good option for those new to equities investing or who don’t want to know too much about it. Financial institutions whose sole purpose is to manage money for financially illiterate people. With the growth of machine learning, a concept known as Robo Adviser has gained much traction in recent years. They ask you several questions online and then offer and maintain an automatically created list of funds for you based on your current situation. It’s simple to get started with, and you don’t need any financial understanding. The one we would suggest to you is Wealthfront.

On an endnote, the goal is not to make massive amounts within a short time but instead to choose an investment plan that will be sustainable in the longer run. You can start slow and upgrade your investments along the way.

If, after reading this article, you’re wondering how to do all of this alone, here’s the good news: you don’t have to do it all. Concentrate on a few tasks and complete them well. It all starts with investing in yourself.  Do lots of research online, read plenty of books, and listen to podcasts. You will get there, eventually!

Disclaimer: This article is not intended to provide professional financial advice. Instead, it is based on the author’s personal experiences. That being stated, the writer is not responsible for any financial decisions made due to this advice. Please read and use this knowledge at your discretion.

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