Ways to earn more on your savings

Raise your hand if the interest rate on your CDs and other risk-free accounts is practically zero. If your hand is NOT in the air, please call me immediately!

These are tough times for anyone looking for a return on low-risk investments. While the Feds are keeping interest rates low to encourage consumer spending, it means you can forget about getting rich from interest income on savings, CDs, and other insured accounts.

So when I saw this recent post on Moneytalksnews.com, I had to pass it on. You can read the full story, but here is an abbreviated list of eight ways to earn more on your savings.

Leave a comment and let me know you’re using any of these strategies or if you have any additions to the list!

Shop around – Use an online search to compare rates for insured savings accounts nationwide. Smaller local banks and credit unions often have higher rates than the bigger banks that show up in these search engines, so check local deals too.

Invest in stocks – Investing in stocks is obviously riskier than putting money in an insured savings account, but the rewards can be much higher.

Mutual funds – One of the keys to investing on Wall Street is diversification: Spreading your money out over a group of stocks or bonds is safer than just buying one or two. That’s the idea behind mutual funds. With a mutual fund, your money is pooled with other investors’ and invested into a big basket of stocks, bonds, or both.

Bonds – Bonds are basically IOUs from companies or federal and state government agencies. As with a bank CD, when you buy bonds, you’re loaning money and earning interest. You can either hold the bond until it matures or sell it on the open market prior to maturity for its then-current market price.

Peer-to-peer lending – With peer-to-peer lending, you’re the bank. Individuals post loan requests on different peer-to-peer lending sites. You fund the loan and earn interest. The biggest sites are Prosper and Lending Club.

Real estate – If you have the money, it’s a good time to buy real estate now that many experts believe the housing market has bottomed out. You can rent the home and wait for it to appreciate.

Microloans - You make a small loan to entrepreneurs around the world – they use the money to fund projects ranging from farming in the Dominican Republic to green businesses in Argentina.

Collecting - Collecting things is a good way to combine a hobby with a potential money-maker.

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– Nedra Rhone, for the Atlanta Bargain Hunter blog

5 comments Add your comment

Anil @ PeerCube

October 29th, 2012
1:28 pm

U.S. Treasuries I-Series Bond from missing from your list. Though they can be considered as part of Bonds in your list, I believe they are better substitutes for low-rate bank CDs. They are paying more than banks and CDs, inflation protected, and almost risk-free (unless US goes bankrupt). They are quite flexible, after a year you can cash in if you want by just forfeiting 3 months of interest or after 5 years without any penalty. Only restriction is that you can’t invest more than $10K per SSN per year. We use I-series bonds for storing emergency funds instead of CD ladders.

We also very active on both Lending Club and Prosper peer to peer lending. Only clarification, I will make that you are not effectively acting as a bank but as a credit card company as loans on p2p lending platforms are unsecured. We found p2p lending so promising that I write about it on my blog Random Thoughts http://andirog.blogspot.com and also created PeerCube http://www.peercube.com service to help fellow p2p lenders with selecting loans on Lending Club platform.

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October 29th, 2012
3:19 pm

We need to remember that when interest rates are high, inflation is probably high and eroding your earnings anyway so you’re not much better off. You have to invest in securities and real estate if you ever really want to earn anything.

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November 4th, 2012
10:23 pm

I am investing very small amounts into savings accounts usually only the money I would need in a very near term. For long term savings I use Lending Club and dividend paying stocks. In my Lending Club account I have saved little bit above $7k so far and I have been with Lending Club for almost 3 years. During that time I have never had a defaulted note or even late note. I developed a strategy capable of warning me in time to sell troubled note before it gets into a trouble. My return rate is now at 13.12% and rising. In my stock account I invest into dividend paying stocks which have great dividend history and solid dividend growth (such as JNJ, ABT, O, MCD, T etc.) and I am reinvesting all dividends to compound my money making machine. I am achieving great results so far. I post my accounts and steps I am doing on my own blog (http://hellosuckers.net) so if you are interested, check it out. Thanks