When we hear the term, “fixed income,” we usually think of retirees living out their twilight years on finite, modest and strategically balanced sources of income. The truth of the matter is that we all live on fixed incomes. Most people nowadays live paycheck-to-paycheck.
All it takes is an unexpected layoff, reduction in pay, or a financial emergency to disrupt a modest financial lifestyle. Modest financial lifestyles that we all blissfully take for granted. The average 40-hour work week salary for a year, according to the U.S. Bureau of Labor Statistics, is about $46,000.
If you could double a strategic amount of money, wouldn’t you? If you are strategic, you can double an investment within months, or a few years’ time.
High Yield Bonds
Bonds are basically a loan that you extend to a government or corporation. The U.S. Treasury Bond is a loan to the American government with a guaranteed, yet modest interest return. As of this writing, the 10-year bond has a yield, or interest rate, of 1.47%. Experts are worried about a recession because the 1-month, 2-month, 3-month, 6-month, and 1-year bonds have higher yields.
However, you can also buy high yield/high-risk bonds from corporations, foreign governments and companies, local and state municipal bonds, and so on. The yield for such bonds can range from 3% to 8%. Junk bonds are bonds issued by a corporation that needs quick cash infusions for a takeover over some other endeavor. Junk bonds usually have a yield of 4% to 6%.
However, unlike the virtually guaranteed U.S. Treasury bond with its modest yield, high yield bonds are extremely high risk. A corporation could go out of business, the local municipality could experience an economic downturn, the corporate takeover powering a junk bond could fizzle.
There is no reward without risk. You can develop a diversified portfolio of bonds. Also, you need to have a value investment mindset and only buy bonds from sources you have researched or vetted through experts. A bond with a 5% annual yield will double in 14 years.
Live Way Below Your Means
OK, want to double your money quicker? Assess your expenses for a three-month period and calculate the amount spent. Then, make an expense diary of everything you buy for a month. Do you really need that daily candy bar? How much is it costing you to eat out or order takeout every other day? Do you really need that 120-channel premium cable package?
The uneasy truth is that most people cause their own financial troubles. Make a financial list of what you need vs. what you want. Reassessing how you spend money could help you double your money in a matter of months.
The Gig Economy
OK, you want quicker ways to double your dough? Offer to carpool coworkers if they pay for gas. Sell your blood or plasma. Rent out your parking space or car on P2P websites. Monetize a valuable skill. Rent out space in your home via AirBnB. There are too many ways to make money in the digital age gig economy if you have the time and drive.
Keep it in Perspective
In reference to the title of this article, there is no such thing as easy money. Doubling your salary, while possible, could take multiple years or longer. Calculate a realistic amount of money you want to double and realistic assess how you can do it.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.