How To Invest An Extra $500 In Monthly Income
I have talked frequently about my short term side income goal of generating $500 in additional income each month. I felt that this was not only an attainable goal but also a chunk of extra monthly income that could make an impact in my financial life.
In this article, I want to tell you a few ways on how to invest $500 in extra income. Remember, this money is considered extra money that is on top of your already established budget, savings plan and investing plan. Keep reading to understand what I’m talking about.
A Few Assumptions
Before we begin, the ideas in the rest of this article are dependent on a few things. First, you are debt free (except for mortgage). Second, you already have a solid plan in plan to save part of your income and invest part of your income. For many of you, this will mean you are in a 401(k) plan. Lastly, this also assumes that the $500 that we are discussing is income after re-investing in the income stream. For example, if my blog is generating $500 a month, but I am re-investing $100 a month, I only have $400 in extra income. Now, if those things are good to go, we can talk about how to allocate the extra $500 a month.
The goal is to both maximize the money in terms of return and also provide a diversified or an investment
that is supplemental to the investment plan already in place. We will assume that the investment plan already in place is a diversified stock portfolio. Let’s look at a few options that will accomplish this goal.
Paying Down Your Mortgage
A great option for the extra $500 a month is to put that towards your mortgage. How would you feel if you were paying your bills, still putting away the same amount of money towards your retirement accounts and were also putting an extra $500 a month towards the principle of your mortgage? This investment would offer a nice, guaranteed return (for me, 6%). Also, it offers the pursuit of the peace of mind that owning your home outright offers. Not a bad option at all.
Many financial planners debate back and forth about paying down a mortgage versus investing the money in stocks. Most end up agreeing that the stock market will offer better, long term returns (although they may reconsider after recent stock market performance). With the extra $500 a month, you can do both. This offers a diversified approach to where you are putting your money. Pay down your mortgage with the extra income and keep your savings and investing plan from your main source of income the same.
Long term inflation is serious problem for America and anybody who has most of their assets in dollars. A great way to hedge against this is to invest in gold. Most of you probably do not have a position in gold. How about adding $500 each month to a gold position for the foreseeable future? This position would build nicely and the position won’t be able to get hit by irresponsible government spending and disastrous fiscal policy.
If you already own a home, perhaps you wish to consider a second property, an income-producing property. The $500 a month might help go towards a down payment on a piece of property with the intent of gaining cash flow. I would strongly discourage buying real estate with the hope for future appreciation; those days are over. However, a great deal on a cash flowing property might be a great investment
The Purpose Of This Article
Why would I write this article? After all, probably most of the people that read this article do not have something in place that generates an extra $500 a month for them. If they don’t have the money in the first place, why talk about how to invest it?
This article is to serve as motivation for you to work hard at a second income stream so you can get the income and be able to choose one of the options talked about here. Imagine the impact on your financial plan or financial goals by having this extra money. The reality is that it is not as hard as you think to get this income stream up and running. I talk about it a great deal on this blog how to get your own online business up and running. Do it. The time is now.
I talked in a recent article how for the first time since starting this blog, I have had consecutive months over the $500 mark. I am really excited about hitting this goal. So, assuming I can keep this $500 a month in income consistent, what are my next goals?
My next goal is $1,000 a month. If I can hit this goal, I think I will be able to get to the next level, possibly as much as $5,000 a month from this online business. I have some ideas that I want to implement but I need to continue the current growth trajectory first. Once I hit my next level, some of these ideas can come into play. Either way, it will be a great learning experience.
If my monthly side income gets into the thousands range, how will I invest it? Well, probably a combination of the investments that I described in this article. Paying off my mortgage, building a gold position, income producing properties: these are all very attractive to me. However, due to my beliefs that we will have some serious inflation in the future, I may not pay down my mortgage at all and instead focus on gold and other opportunities. Time will tell.