- I'm trying to double how much passive income I make — first, by investing it in new side hustles.
- I'm on the lookout for the best high-yield savings accounts and CDs to roll my money into each year.
- While I prefer low-risk investments, I also sometimes put money in an index fund like the S&P 500.
For most of my 20s, my only financial goal was to stay out of debt. But once I turned 30, I started taking managing my money more seriously. Not only did I open a retirement fund and an emergency savings account, but I also started working hard to grow my net worth through passive income.
One way I quickly did that was by switching where I kept my cash. For over a decade, most of my money sat in a checking and savings account with a bank that offered very low interest. Once I moved all that money to a bank that had a high-yield savings account and CD, I was able to earn thousands of dollars a year in interest.
While earning that money is a great boost to my finances, I also want to double the passive income I earn from my high-yield savings account and CD every year. Here are the three ways I work to do that.
1. I fund a passive income side hustle
I usually put a huge chunk of my money into a high-earning 1-year CD. Once the CD matures, I take a portion of the interest I earned that year and use it to find a passive income side hustle.
For example, last year, I used $250 from the interest I earned on my CD to create a new online course. The money helped me pay for a course hosting platform, hire a virtual assistant, and a video editor.
Once the course launched, it brought a variable amount of passive income every month (from $150 to $600 a month). Not only was I able to double that initial investment, but the money helped me fuel a new recurring passive income stream.
2. I put it back in another high-yielding account
At the end of the year, I look at all the high-yield savings accounts and CDs I have my money in and look for banks offering the best possible rates. I also roll some of the money that I earned in interest the previous year into new accounts.
At the start of this year, I took $2,000 in passive income from my high-yielding accounts and put it into a 12-month CD that offered 5% interest.
By reinvesting a portion of the passive income earned on these accounts every year, I can guarantee that the money will continue to grow and eventually double.
3. I invest it in an index fund
While most of the ways I reinvest my earnings from these high-yield accounts carry minimal risks, I do put a portion of the money into an index fund.
In the past, I picked the S&P 500 index fund since it's made up of about 500 of the largest and most profitable firms in America. It's also known to average about a 10% return annually over long periods.
While it might take seven to 10 years for the money to double in this index fund, and there's no guarantee, I consider this a long-term investment, and once the money goes into the index fund, I leave it there, untouched.
