Putting several thousand dollars into savings is a great accomplishment, but if you don’t put it to use in the long-run, inflation may devalue the buying power of your money. Luckily, when you have so much available on hand and in cash, you have many options you can take advantage of with the funds. These below can help put your money to work for you.
Invest in Real Estate
Real estate usually retains its value and often increases in value over time. One of the best places to look for real estate to invest in is college towns. Once you have purchased a home, you can rent to a variety of people, whether it’s students, university support staff, professors, or other employees. College towns bring in many people, and not all of them may be looking to stay in the area long-term, so they may need a rental. Investing in a college town gives you access to many potential tenants. To know more about some of the best investment areas, you can review a guide with everything you need to know about income potential.
Focus on Retirement
Your future self will thank you for taking the time to invest in your retirement. You can open a Roth individual retirement account with your after-tax dollars, so you will not need to pay taxes on the money when withdrawing it. It’s essential to know that these accounts have certain restrictions, so look at the IRS’s website for more information. There may also be a contribution limit, so pay attention to that as you plan your finances.
Save a College Fund
If you want to help kids through school, you can put part of your nest egg into a college fund for them. A 529 savings plan can help you save for your education. Contributions are usually not deductible on your federal taxes, but if you owe state income taxes, you may be able to deduct donations from those taxes. The funds can be used to pay for tuition to a religious, public, or private school to the end of high school, or you can use the funds for college-related expenses. Saving money this way can give you higher returns than if you were to keep it in a savings account, especially if you start early.
Focus on Debt
Using some savings to pay off loans or credit card debt is a great way to put your money to work for you. You often pay a higher interest rate on debt than you would get by investing in it. Many credit cards and even personal loans have higher rates, so you lose money if you don’t try to pay it back. You can also take steps to pay off debt or pay back more of your mortgage if you have several thousand in your savings. Increasing your monthly payment even a little can save you thousands of dollars off the life of the loan. It also allows you to get out of debt faster.
