Making Money Work For You
Who knows what competition may look like in three years, who knows what legislation will be enforced next. Now don't mistake me for a doom-and-gloom person, I just thought it would be good to plant a seed about planning ahead that can grow along with your wealth.
The approach will vary slightly depending on what sort of webmaster you are: Do you spend most of your time building and submitting to TGPs, Free sites or AVSs? Or are you managing the content for 25 full fledged paysites? Obviously you are going to need to put more revenues back in the business if you have paysites, since they require more content and updates to keep members happy, but the basic approach is still the same.
To become (or continue being) wealthy in the future, you need to make a strategy for money management. If you are not living very tightly from day to day, sponsor check to sponsor check, it is a good idea to reinvest a certain percentage of your earnings. First put away what's needed for content and hosting etc. Then take for example 20-40% of your profit, and keep half of it in a regular boring bank account not to be touched. The other half is where you can build your wealth.
Where you invest this money is a matter of personal taste and experience, of course. To give a few examples, you can buy stocks, keep money in a managed fund, or give Foreign Exchange (Forex) a shot. But no matter which you choose, be sure to choose wisely.
All investments include risk, and the same old advice, "Never risk more than you can afford to lose," should certainly still be taken seriously. Consistency is also a word d' jour to keep in mind when investing. You need to be able to watch your stocks/Forex/funds lose value without getting irrational about it. Trying high risk investments only to try to win back your losses is gambling, and gambling is not trading wisely.
Let's have a closer look at different types of investments suitable for a webmaster like yourself. Stocks rise one day to take a plunge the next, but if you are good at trading, or know someone who is a good trader, you could give it a go. Yahoo Finance offers most of the things you need to know.
Mutual Funds, the type you can buy at your bank or online broker, are really nothing more than a portfolio, a big managed portfolio at that, but still just a portfolio. It can consist of many different kinds of papers, like stocks and bonds, in many different levels of risk. A site that has information and ratings on tons of mutual funds is Morningstar.com. Choose a portfolio of several funds that match your level of risk and expected return.
Then there are so called HYIP (High Yield Investment Program) sites all over the Internet. Most of these, if not all, are scams only designed to take your money. A typical HYIP will promise to pay you anywhere from 3-150% daily. It is really a ridiculous claim to make, since nobody can guarantee that much. If you are tempted to give one of those a try, only invest a little money – maybe a couple of signups worth – and see what happens. I believe some people are really getting their money from these programs but they are often designed to take the newest member's money and give back to a member who is due for payout, and it all fails when new recruits are no longer coming. Don't blame me if the website suddenly doesn't show up without a trace on your due-day. If you decide to try one, go for a low percentage per day scale, they are of course a bit less probable to be pure scams.
The instrument that appeals most to me personally is Foreign Exchange speculation, Forex for short. The possible rewards along with compounding your profits can make it very profitable, and risk can be kept low using good money management and never failing to put a stop loss order. But you need to know what you are doing. The alternative is to have your Forex account managed by a pro who really knows what he is doing. On my website you can get more info on a managed account.
Now that you have a plan, stick to it and leave as little thought to the money you have put away as possible. Keep webmastering, but keep doing it with the plan to put away money and letting it grow for your own future. Webmastering will be much more appealing when you don't need to worry about what Mr. Ashcroft & Co. is planning next, or whether the summer slowdown will be worse this year.
Start your financial plan now; you don't have to be a pro let your money start working for you instead of you working for your money.
Marq, an adult webmaster since 1997, is owner of Duraprofit.com, a website where webmasters can learn about the world of Managed Foreign Exchange speculation and what it can mean to their wealth.