Re-Channel Your Expenses to Build Your Investment Funds
Re-channel your expenses and convert them into an investment product. Don’t be too ready to part with fresh money you will be earning from your current job or taking out a loan to use as investment fund. Instead, just re-channel the money you have been spending in the past for things you can actually do without.
If you’re paying for Cable TV that’s about $50 per month, then you can use this to open a savings account. Actually, you only need about $25 as an initial deposit to open a savings account that earns 0.35% APY or Annual Percentage Yield. During the first month, the $50 Cable TV money will stay intact as your savings account and will yield a gross interest income of $0.01458. This was simply computed as $50 x.0035 x 30/360= $0.01458.
This may not seem much at the end of the month but you have to keep in mind that this money could have been spent for Cable TV instead. On the second month, your Cable TV money will again be added to your savings account deposit and your total account balance will be $100.01458. Your interest for the month will be compounded by simply following the same method of computation. $100.01458 x 0.0035 x 30/360= $0.02917 as your yield for the month.
By adding the monthly $50 Cable TV money for the next ten months, your account balance will be $600 plus minimal interests earned. If you have other expenses which you can divert to your savings account instead of using it up as an unnecessary expense, re-channel them instead in order to build your investment fund.
Start placing your money in a higher-yielding Certificate of Deposit (CD) and lock the interest rate based on the prescribed period. In as much as you were able to keep the Cable TV money intact for a year, you can invest it in a CD for a one year term. If a 1-yr CD has a yield of 1.43% APY, your $600 will earn a gross interest income of $8.58.
Of course you won’t be content with this kind of earnings but our objective here was to re-channel money that could have been spent elsewhere, but was used instead to build your investment funds.