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2 points · 1 year ago

Investing $10k to get a good return is one of the toughest amounts to deal with, in my opinion. It's too much to do the easy and obvious stuff (pay off a $1k credit card which you've probably already done long ago) but too little to do something big with that won't tie it up forever to assure a decent return (buy a house, get some mutual funds).

I've come to think that there's an easy way to get a good return over a relatively short period of time that's also a controlled risk. Sounds like you rent so offer to pay your landlord a year's worth of rent in advance in exchange for one month free. What you earn on your money is 8.33% (1/12) and is something you'd have to pay anyways. MAKE SURE that you continue to pay your rent each month but pay it to yourself instead (otherwise, you are stealing from yourself). As a landlord, I am surprised that no tenant has tried this offer on me. Personally, I wouldn't take an 8% reduction on my gross rent but I would take 4-5% if I had a project in mind where I needed some cheap financing. But I could definitely see some who would accept this offer. I'm sure many will reply that you need all of this money in the safest possible reserve account. But the reality is that if you actually want to earn something on your money, it requires taking on more risk and this is a relatively low-risk way to do that. In addition, it's not that you'll suddenly be completely vulnerable financially. Your financial cushion will simply be transformed from static savings to high positive cash flow, i.e. you will have money available each month that is far in excess of your liabilities.

A couple notes of caution however:

  1. Only do this if you have been in your apartment a while, have some history with the landlord and they have shown integrity. The last thing you need is to be evicted for some spurious reason and have to chase your landlord for money.

  2. Make sure you have a lease! It should spell out the terms, be at least one year term and should reflect this payment arrangement.

  3. As mentioned above, you must continue to pay yourself rent over the year to build up your cash. But if all goes well, you can earn up to $833 on your $10k in addition to whatever else you have saved in the meantime.

Good luck.

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