As I've grown older and wiser, one thing I have discovered is that if you want to be wealthy, it is imperative to make your money work harder. Now, this might sound like an empty platitude at first. Make your money work harder? What does that even mean?
But I think it has a very specific definition. I believe that making your money work harder means having it perform more than one function at a time. A prime example of this maxim is owning your own home.
If you don't own your own house, you have to rent. You pay many hundreds - if not thousands - of dollars every month to a landlord in order to have a place to live. But if you buy a house, you not only gain a place to live, but you also have an asset that potentially appreciates in value over time.
When you buy a house to live in, your money works harder for you. It provides you much needed shelter on the one hand, along with a tangible asset. Your money, in effect, does double duty.
Of course, this situation assumes that the house you're looking to buy is priced at rental equivalence to the apartment you rent. If the house is grossly overpriced, then your money isn't working harder anymore. It defeats the purpose.
But, in theory, we would want all our household expenditures to feature this dual benefit of providing a needed service while simultaneously accruing value. However, this isn't possible in every situation, like the food we eat. It simply isn't possible to have your physical cake and eat it too. Sometimes when you spend a dollar, it is consumed and gone forever.
However, there are a surprising number of situations in which we can make our money work harder. Insurance is one of these circumstances. Most of us need to buy insurance to protect ourselves and our loved one. We need auto insurance, homeowners or renters insurance and sometimes life insurance.
We normally think of insurance premiums as spent money. It is flushed down the rat hole of endless monthly expenditures. If you don't make an insurance claim, then what good was that expense?
But did you know that there are entities called mutual insurance companies? These are insurance companies that are not owned by shareholders, but by their policy holders. Every time you pay a monthly policy premium, you, along with every other policy holder, actually accrue ownership in the company.
Although it is a well kept secret, the same thing is true in the banking industry as well. Credit unions are banks that are owned by their depositors. And while they do not seek to maximize financial profit, these organizations often benefit their depositors by offering lower rates on loans and higher return on savings products. Once again, establishing an account at your local credit union can help your money work harder for you.
You can also make your money work harder in your brokerage account. One strategy I'm very fond of is writing covered calls. This is when you buy stock in a company and then sell a call option against it. This allows you to retain all the benefits of owning the stock, including dividends and voting rights, while simultaneously receiving extra income from selling the call option.
Of course, nobody will give you something for nothing. Selling or writing a call option caps your potential upside profit on the stock as it can be "called" away from you at a fixed price in the future. But regardless, writing covered calls is an excellent, time-honored way to make your money do double duty. It allows you stock ownership while simultaneously providing you extra income.
However, perhaps the most overlooked way of making your money work harder is by purchasing art and antiques. These compellingly beautiful items have been avidly collected by the wealthy and sophisticated for centuries. And for good reason too. Art and antiques occupy both a decorative, aesthetic role, as well as an important financial niche.
I believe art and antiques are one of the best opportunities for the average person to make his money work harder for him. Most people decorate their houses in order to provide visual interest and also express some of their individuality. Art and antiques, with their unique combination of luxury materials, historical importance and unrivaled beauty, are perfectly positioned to fill this need.
Think about it. You have that blank space over your couch or the fireplace mantle or on top of the bookcase that you've been meaning to fill. A piece of fine art or an elegant antique would not only look good, but could also be a lucrative investment. Why dribble your money away on a mass produced piece of mediocre décor from Crate & Barrel or Pottery Barn when you could be buying the real thing for not much more?
Have you ever wanted a leaf from a medieval illuminated manuscript hanging on your wall? It can be yours for a few hundred dollars. Interested in a 19th century Edo era Japanese lacquerware box? That can be arranged for less than you think. Or maybe you crave a vintage mechanical Breitling chronograph watch for your wrist? They are surprisingly affordable. Even a vintage engagement ring can be a great investment as well as a symbol of eternal love.
Art and antiques come in a dizzying array of styles, with something to fit every budget and taste. Best of all, they have two dimensions of value. On the one hand they are superbly decorative and, when carefully chosen, reflect our unique personalities. But they can also appreciate in value over long periods of time. In fact, it isn't unusual for fine antiques to increase in value reliably for decades or even centuries! Investing in art or antiques makes your money work harder for you. And in a world where every penny counts, that benefit is tremendously valuable.
