Earning While You Wait: 4 Money-Making Savings and Investments

Now that you've earned some money, what are you going to do with it? (And no, I'm not talking about upping your Starbucks habit.)
Traditional bank and credit union savings accounts typically provide dismal returns at best, ranging in the .005% range, and CDs through these institutions are hardly much better. Given that these rates hardly keep up with inflation, using your savings this way is almost guaranteed to lose you money. Fortunately, there are other options that will help you keep more of your hard earned money.

1. Finding specialized savings programs through a credit union: Though the average savings accounts through banks or credit unions are not fantastic, there are sometimes a few gems that can be found. For example, Schools First Credit Union offers a "Summer Saver" account for school employees, giving returns of 3% without locking in your funds like a typical CD of similar interest would. Individual credit unions serve a variety of employment and geographic groups, so it is worth a look to see if you may qualify for a specialized savings accounts.

Don't fit into a qualified group? Fortunately, there are still more options for the average person.

2. SmartyPig Savings: Backed through BBVA Compass Bank, SmartyPig is an online savings account that returns 1% interest. Unlike most regular savings accounts, you can not dip into your funds and must cash out all of your funds if you want to use your money, but unlike CDs, there is no set amount of time that you have to keep your funds deposited and no penalty for withdrawing them at any time. SmartyPig also has the extra benefit of allowing you to cash out your money on a special SmartyPig debit card which can pay you 1% back on all of your purchases. Finally, there is a social element to this account, where you can set a specific goal and amount for your savings account and share it with friends. You and your friends can choose to donate to each other's goals, sharing the wealth and helping you all succeed. They even have a referral bonus where each friend who uses your referral code to use a SmartyPig savings account will give you an extra $10 towards your goal. Better interest and much more fun than your typical bank savings.

3. Betterment Investing: Investing in bonds and stocks can be lucrative, but without the time or know-how to do it properly, it can also be very risky. Betterment helps you lower the risk while still earning decent interest by allocating your funds for you. You can pick your level of risk by allocating the percentage of your funds you would like to go to stocks or bonds, and Betterment does the rest. They even provide projections for your account based on the risk level you decide, showing best/worst/average outcomes, as compared to different risk levels you can choose to take. Their fee is 0.35% as long as you deposit $100 a month, though you are able to withdraw your cash whenever you like, meaning your $100 is unavailable only for a few days while it is in transfer back to your bank. Of course, this is still the stock market, so there is the risk you could lose some of your money, but I've kept positive returns based on a 70% risk rate, so all in all it seems like a pretty good deal.
(EXTRA BONUS: If you sign up for Betterment through the link on this blog HERE, Betterment will deposit an extra $25 to your account. Must make an initial $500 deposit and not withdraw the funds for 90 days).

4. Lending Club: Lending Club is a peer-to-peer loaning platform which cuts out the middle man (banks) in loaning and allows investors to collaborate their funds to provide an individual with a loan. Most of people asking for loans are using the funds for debt consolidation, though there are also others for businesses, special projects, house renovations, etc. The majority of investors place $25 in each loan, distributing the risk for each individual investor. The loan platform decides the interest rate based on a borrowers "grade" ranging from 3-25%, and allows you to see pertinent factors like the borrowers income, debt-to-income ratio, credit lines, credit score, and so forth. Just like a regular bank, you are partially protected by the fact that the platform screens candidates and approves a loan application, along with the fact that these loans do affect credit scores and the platform will go to collections on defaulters.
Prosper also serves as a peer-to-peer lending platform, though Lending Club is what I have been primarily using and seems to give better returns. Sites like Lend Academy can also provide information on informed investing and help you decide how to allocate your investment funds.
(For those investing in Bitcoin as well, BTCJam is a useful peer-to-peer lending platform for the alternate currencies).


And, of course, when doing any kind of saving or investing, it's good to have a system in place of how much and how often you will deposit your money. Check out the 52 Week Challenge HERE for some inspiration.

Good luck and good savings!