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How to Make Money Work for You: Top Alternative Investments

When you know how to make money work for you, you no longer need to work for money ever again. That’s the ultimate wealth achievement, so it pays to explore alternative investments that have this capability.

Nearly everyone seems to know a way to earn or work for money, but most people don’t have an idea how to make their money work for them.

Do you know that if you work for 40 hours per week, you would be on your job for 2,000 hours each year and not earn nearly as much as you deserve to or could? The most effective way to earn money is to have a passive income stream.

To help you figure out how to gain financial independence, here are a couple of ways to you can make money work for you.

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Below are examples of ways to make a passive income. Each has its own pros, cons, and risk. It’s important to talk over any that you’re interested in with your certified financial planner before investing to make sure it fits your long-term financial goals and risk tolerance.

Alternative Investments: 8 Passive Income Streams To Make Money Work For You

Passive income can be defined as extra cash that comes in regularly without any effort on the part of the investor. It can be one of the most effective methods of making your money work for you.

Investing in the stock market is a type of passive income, but that depends on the amount of time spent on that activity.

There are various ways to create passive income streams. Let’s explore a few of them.

1. Website Investing

Website investing is when you buy a revenue-generating website (an established blog) that earns from passive income sources like affiliate marketing, digital products and display ads.

You improve the site to increase traffic and earnings, and then you either hold it to enjoy the revenue, or you sell it to a new owner for profit.

Websites can sell for up to 40 times what thy earn per month! Learn more about website investing here.

2. Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) can be a great option for individuals who can’t afford or aren’t willing to take the risk of purchasing a property. A REIT is an entity that owns income-generating real estate.

Investing in REITs opens you up to the gains, sales, refinances, loss, or income on the property from dividends paid by the company. However, you should be aware that the dividends earned are taxed like regular income, which could cause you to be in a much higher tax bracket.

Investing in REITs is easy; you simply need to buy shares through a broker. Other REIT-linked investment opportunities are REIT exchange-traded funds (ETFs) and REIT mutual funds.

It is crucial to speak with an expert financial advisor before putting your money in any of these investments. 

3. Annuities

An annuity refers to an insurance product that an investor pays upfront, providing them with a residual income stream for the remainder of their life through monthly payments. It is also possible to have other dependents and a spouse use the income, guaranteeing income growth in line with inflation.

While annuities might seem like a great investment option, you should note that many of them have low interest rates. And when this is coupled with access restrictions to your money and high fees, they might not seem like the best investment when your financial goals are taken into account.

Nevertheless, annuities may be what you’re looking for if you’re risk-averse, as they guarantee monthly returns indefinitely.

4. Real Estate

Regardless of its cycles, real estate is one of the most preferred choices for individuals looking to generate long-term returns. Unlike the stock market or a 401k, real estate requires more upfront capital when investing.

However, it is possible to get a property loan by paying only a 5% downpayment. This amount depends on both the type of loan and the lender.

To make a great investment, the income you generate from renting the property should exceed mortgage repayments and any other expenses on the property. 

Additionally, you can also take advantage of a number of expense-related tax deductions on the rental property, making it a tax-effective method to invest. Speak to your CPA to see what tax benefits you can take advantage of.

5. Investing in the Stock Market

Most people believe that to invest in the stock market, you need a lot of capital or at least access to huge sums of money. This couldn’t be any further from the truth.

Just about anyone can start investing in the stock market with what they have. You can start investing with anything from $500 to $1000 and leverage the power of compound interest investing as you make more money.

Another misconception is that you need to be quite knowledgeable about the stock market before investing in it. But this is not necessarily true.

Of course, basic knowledge of the stock market is important, but you don’t need to know everything about the stock market to invest in it. That’s what trusted financial advisors are for!

Several passive income investments are available in the stock market that let you simply deposit money and are hands-off. Some of these investments include:

Target-Date Funds

A target-date fund is an investment fund serviced by an investment company looking to grow assets in a particular timeline. The assets in that target fund are usually reinvested and rebalanced automatically, ensuring there is little to no effort on the part of the investor.

Target-date funds are typically used by investors to achieve a specific goal in a particular timeline. The goal could be saving for college or retirement.

The target-date fund’s portfolio manager uses that time to create an investment strategy that ideally meets the investment return by the end of the timeline.

Target-date funds are usually fashionable among investors searching for an automatic long-term investment that has a hands-off approach.


Robo-advisors enable you to invest in the stock market without having to research every single investment for yourself. These Robo-advisors work by leveraging your investment goals to create a portfolio that helps you achieve your financial goals. 

You should note that these services aren’t free, but they tend to charge just a fraction of what a typical investment manager will charge – about 0.40% of your entire investment portfolio.

There are a plethora of Robo-advisor services to use, and most let you open an account online. Once you register for an account, you will have to fill out a questionnaire detailing your investment goals, timelines, and risk tolerance.

Using the information you provide, the Robo-advisor service will recommend an automated portfolio that matches your preferences.

Exchange-Traded Funds (ETFs)

An ETF is a group of stocks or securities that track the performance of an index. Typically, ETFs include various investment types, such as commodities, bonds, mutual funds, stocks, or a mix of two or more of these.

Investing in an ETF doesn’t mean you own the underlying investments. What it means is that you own shares or units in that ETF that owns the underlying investments.

The value of an ETF tends to move in parallel with its tracked index. For instance, if the tracked index has a fall or rise of 2%, this will result in the ETF falling or rising by the same percentage. The change in the margin would be reflected by losses or gains to your returns.

ETFs are extremely popular among low-key investors because they contain various assets for a diversified portfolio. ETFs, by design, generally have lower fees compared to traditional managed funds.

The majority of ETF providers allow prospective users to create their investment account online in just minutes. However, you should note that different ETFs have different risk profiles, investment spreads, and different fees, so it is imperative to conduct some research and compare the various options to your financial goals.

6. Investing In an IRA or 401k

One of the most effective ways to make your money work for you is by leveraging tax-advantaged accounts. IRAs and 401ks are investment accounts where your savings are invested in the financial market. This gives your savings the potential to achieve exponential growth. 

These two forms of tax-advantaged accounts are great for retirement savings because, depending on which you choose, no taxes are levied on the money you invest or no taxes on the accumulated growth of those investments.

What is the Difference Between an IRA and a 401k?

A 401k is a retirement plan sponsored by an employer. This means when you contribute a portion of your pre-tax earnings into your 401k, your employer matches your contributions. The majority of employers tend to offer a form of 401k to their employees. 

If you work at a company that doesn’t offer a 401k or you happen to be self-employed, you can start saving for your retirement using an IRA. Just like the 401k, the assets saved in your IRA are not tax-eligible until they are withdrawn.

There are even some IRAs like Roth IRAs that provide tax-deductible contributions for individuals without an employer-sponsored 401k.

Related: Can You Lose Money in a Roth IRA?

One clear advantage the 401k retirement savings plan has over the IRA is that some employers match contributions to a certain limit. However, choosing an IRA can be a great choice if the employer-sponsored 401k is unavailable to you. 

It can also be a good idea if you aim to save a lot more than the maximum yearly 401k contribution, which stands at $19,500. An IRA lets you save $6,000 into it annually, either in addition to the 401k contribution or on its own.

There are income limits for contributions so speak with your financial advisor to make sure you’re eligible to contribute to a plan. They can also help you figure out whether a traditional or Roth IRA would be better for your particular financial situation.

7. Create a High Yield Savings Account

One piece of advice that most financial advisors agree on is that it’s smart to have an emergency fund savings account. Typically, this savings account should hold about six months’ worth of your living expenses. 

Related: Emergency Fund vs Savings – What’s the Difference?

But the world is far from perfect, and most people cannot do so due to their living expenses or income level. Nevertheless, it is wise to start putting some money away in a high-yield account that earns interest while you save.

Most transaction accounts have an interest rate of just 0.01%, which really amounts to nothing. Conversely, high yield savings accounts provide interest rates over 1%, generally 100 times more than the rate for a typical checking account.

Remember that fees, interest rates, and conditions tend to vary from one bank and product to another. If you want higher interest rates, online banks can provide that, as they do not have the traditional overhead cost of maintaining branches. 

You should also note that certain banks might restrict how many times you can withdraw from a high yield savings account. Ensure that you do your due diligence before choosing a product and a bank.

8. Pay Your Debt Down

Your debt could be a student loan, credit card debt, or any other form of debt. Regardless of what it is, you have to deal with it.

The majority of people tend to have one form of debt or another, and while owing some money might seem to be a fact of life, the quicker you can get rid of your debt, the quicker you can attain financial stability.

Consider this; every $1 you use to pay your principal saves you from the compound interest on the debt, and this can be the difference between struggling with your debt and becoming debt-free sooner.

For instance, if you make the 3% minimum repayments on a credit card debt of $5,000 with the standard 18% APR, it could take you over 12 years to pay it off, costing you $9000.

Using the same metrics, but this time you add $100 more to your payments, which enables you to pay off the credit card debt with $6000 in just two years. This example clearly shows that paying your debt down faster translates to guaranteed sums in your bank account in the long run.

9. Peer-to-Peer Lending

This process works by matching individuals searching for a loan with those that have extra cash to invest. There are a plethora of sites such as Prosper, Funding Circle, and Upstart that act as aggregators for peer-to-peer lending, making it easier for borrowers to connect with investors.

The returns from peer-to-peer lending can be quite profitable, especially for those individuals that aren’t risk-averse. Investors earn a particular amount of interest on the loans, with the highest interest rates going to borrowers that prove to be the highest credit risk.

This is generally measured by their credit score. Generally, returns range between 5% and 12%, depending on the loan and the associated interest rate.

The downside is if the person you lent the money to is no longer able to pay you may not have recourse to get your money back.

How to Make Money Work for You – Conclusion

You should know that there are quite a number of ways you could make your money work for you. I hope these alternative investments inspire you to become financially free.

This is only a high-level overview of these income-generating investments. Each is far more complex than what this article went into.

On that note, those highlighted in this article are a few that provide a balanced view of investment risks, interest rates, and expected returns. 

This is why I highly suggest making a plan with your financial advisor before investing in any of them. They’ll be able to assess your finances and money goals to give you the best-specialized advice for YOU.

The best time to invest in your future is now, especially when your investments leverage the power of compound interest.

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