Written by: Feras Moussa, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
Do you want to stop worrying about working for money and instead focus on how to make your money work for you? Here's what you need to know! It's no secret that the minds of folks with wealth tend to think a little differently when it comes to money. Scientists have studied these differences, and while there are many reasons why some people build wealth, one of the key differences is that, to the wealthy, money is just another tool. Instead of working to make money, money is a tool that can work for them to increase their net worth further. This transition is significant for most people adjusting from working to make money to have their money "work" instead. If you're wondering how to make your money work for you, here's what you need to know about the secrets of the wealthy!
How to Make Your Money Work for You: A Paradigm Shift
Most people think about money as something that you have to earn. We go to work to make money, save up enough for retirement, hopefully, and spend what we have saved once we hit 67 (or whatever the Social Security age is when you retire). Money is something we're used to working for, and sometimes working quite hard for with 50, 60, or even 70+ hour workweeks.
However, there's only so much labour you can produce. Even if you are ultra-efficient and can work 100 hours per week diligently for 40 years non-stop, there's only so much you can make. Even if you receive $100 an hour for your labour at 100 hours per week, that's $10,000 per week. With 52 weeks in a year, that works out to $520,000 per year. After taxes, that's probably about $350,000, which means that after 40 years of labour, you'll have earned around $14 million.
That's quite a bit of money. But it's a small fraction of what the ultra-wealthy have, and you would have nearly killed yourself with 100-hour workweeks for 40 years (assuming no breaks and no layoffs) - not to mention the lack of any form of life outside of work to get that money!
Work can only make you so wealthy. It provides the seed for wealth, but work alone often does not bring as much financial security as we think it will.
Think of the Money You Earn as Seed Capital for Your Life
Instead of thinking about needing to work for more money, what if that paradigm shifts to thinking about the money you work for as the seed capital for your life.
If you're familiar with investing, seed capital is the first investment in the business. Seed capital is the money that lets an entrepreneur prove that the idea is worthy and viable. It's essential money because seed capital gets a company off the ground it turns a dream into reality for future investment.
Now think about your life. What if the money you earn is the seed capital for your future? What if you could use the money you earn now to open up multiple income streams to make you less reliant on work and open up the door to a higher overall earning potential?
To illustrate this concept of seed capital for your life, suppose you love cars. You have $50,000, and you want to buy a new Mercedes for about that much money. What if there was an investment opportunity that could turn $50,000 into $100,000 every five years? You could buy that $50k Benz now and have no money for a new car in the future without working for it. Or, you could invest that $50k, wait five years, have $100k to buy a Benz for $50k, re-invest the other $50k, wait five years, buy another Benz, re-invest the leftover money, etc., until you can no longer drive.
Instead of working for every new car, you could work for the money necessary to produce an income stream to buy new vehicles in perpetuity! That's a small example of how to make your money work for you!
What Are Some Investment Opportunities that Open These Doors?
As you might imagine, you'll need to choose your investments well if you want to open up the doors to these other revenue streams. While all investments have the risk of loss, three broad investment categories, all of which have the potential for passive income, make your money work for you.
Real Estate
One of the top ways to make your money work for you is to invest in real estate. Real estate syndications, especially commercial ones, can be particularly effective investments.
It's not uncommon for real estate syndications returns to feature 8%-10% returns in rents for five years before selling the building for a 40%-50% profit. The final sale plus the revenues from the rents winds up being typically about double the original investment. Put $100k into one of these investments, and you could see $10k per year for five years, plus a $50k payday at the end.
These returns are how to make your money work for you. Re-invest these funds into successive real estate syndication companies to grow and build your passive income (and net worth!).
Side Businesses
Side businesses typically take quite a bit of work to start, but depending on what you choose, you can sometimes grow them to the point where they provide stable monthly passive income. For example, some people buy a network of ATMs and other assets that can passively make money. Others start businesses that require initial work but eventually transition to where employees can handle most of the labour, while you can collect most of the profits!
What business you start is entirely up to you, but having side endeavours is another fantastic way to generate extra income.
Traditional Investing
Don't discount the stock and bond markets when looking for ways to make your money work for you! Buying and holding stocks can result in substantial capital gains and passive dividend income. Some stocks pay 4%-5% in dividends, and some bond ETFs will even pay higher. With most brokerages now having $0 in commissions, investing in classic asset categories is one of the most direct ways to make your money work for you.
How to Make Your Money Work for You: Build Income Streams!
To be wealthy, you need to know how to make your money work for you. 65% of self-made millionaires have three or more streams of income. A whopping 29% have five or more streams! These self-made millionaires aren't working for each of those five income streams ‒ they're relying on their money to generate passive income opportunities that build wealth over time.
Real estate syndications are arguably the best way to make your money work for you because of their simplicity, although side businesses and traditional investing accomplish this goal. No matter what you choose, transition away from thinking about working for money and instead think about ways you can use money as a tool to work for you!
Feras Moussa, Executive Contributor Brainz Magazine
Feras is an entrepreneur at heart with a tech background. Feras graduated from the University of Texas with a Computer Science degree and worked at Microsoft straight from college. Feras later resigned from Microsoft to ‘bring tech to industries that lack it’, where he later found his passion for real estate. Feras quickly built a portfolio of rentals, completing 9 closings in his first 12 months. After having seen the results of rentals, Feras later decided to scale up into apartment complexes, where he met Ben and started Disrupt Equity, a company focused on multi-family acquisition and investments for investors, and in doing so, help leverage his strengths in tech to better identify quality investments for investors. Feras has helped raise millions of dollars for multifamily syndication
