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5 Ways to Make Your Money Work for You

"She works hard for the money
So hard for it, honey
She works hard for the money
So you better treat her right"

-- "She Works Hard for the Money," Donna Summer, from the 1983 album She Works Hard for the Money

Most of us are used to working hard for our money. We need our jobs in order to earn enough money to keep a roof over our head and food on our table. Most of us need to be saving for retirement, too, but that can be hard to do. It can help a lot to take some of our money and have it work for us. Here are a few ways you might be able to put your dollars to work.

Inage source: Getty Images.

Pay off debts

It's not enough to just be making minimum payments on debts, especially high-interest-rate debts. Those need to be paid off as soon as possible. Not doing so can leave you further in debt and increasingly unable to build a secure financial future. Carrying significant debt at high interest rates is a lot like investing -- in reverse. Instead of seeing your net worth grow, you'll see it shrink as you pay substantial sums to your lender.

Fortunately, that dire situation also means that every such dollar of debt that you retire will give you a guaranteed return, by letting you no longer have to pay interest on it. For example, if you owe $20,000 on credit cards and are being charged 20% in interest, paying off $5,000 of that debt will be like earning a 20% return -- worth $1,000 in avoided interest payments in the first year alone.

Buy stocks

Once you're no longer facing high-interest-rate debt, look into investing in the stock market. Few investments are likely to grow as quickly as stocks can, and grow more over the long run. Here's some evidence of that, via Wharton Business School professor Jeremy Siegel, who calculated the average returns for stocks, bonds, bills, gold, and the dollar between 1802 and 2012:

Asset Class

Annualized Nominal Return









U.S. Dollar


Source: Stocks for the Long Run, Jeremy Siegel.

The table below shows just what a difference the annual growth rate makes to an annual investment of $10,000:

Number of Years Growing

Growing at 2%

Growing at 5%

Growing at 8%




















$1.2 million

Data source: Calculations by author.

You don't have to earn a master's degree in finance in order to invest in stocks, either. You might simply park your money (adding more regularly) in a low-fee, broad-market index fund, such as one that tracks the S&P 500 index (which is made up of 500 big American companies). The SPDR S&P 500 ETF (NYSEMKT: SPY) fits the bill, as do other index funds and exchange-traded funds.

Buy dividend-paying stocks

Broad-market index funds will generally feature dividend payments, but their yields won't usually be too hefty. Recently, for example, the SPDR S&P 500 yielded about 1.8%. You can do even better than that by including some dividend-paying stocks in your portfolio -- or by investing in some dividend- or income-focused mutual funds. Having $200,000 distributed among a handful of healthy and growing dividend-paying stocks with an average annual yield of 4%, for example, will generate $8,000 in dividend income annually -- about $667 per month. That can go a long way in retirement.

Just to give you an idea of what kind of dividend yields can be found these days, below are a few familiar companies and their recent dividend yields:


Recent Dividend Yield

Ford Motor Company








Kraft Heinz






Duke Energy


Verizon Communications






Johnson & Johnson




Data source: Yahoo! Financial.

Best of all, healthy and growing dividend-paying companies tend to increase their payouts regularly, helping your income grow -- and often keeping up with inflation, as well.

Image source: Getty Images.

Develop passive income streams

Here's a great strategy for putting your dollars to work for you that can take more effort than other strategies -- but might pay out even more: developing passive (or largely passive) income. This can take many forms, some simpler than others. Some examples include:

  • Royalty income or residuals: If you can land a major role in a television show that runs for many seasons and then airs for years afterward, you'll collect cash for each rerun. Alternatively, you might upload lots of good photos to sites such as or, where others can buy them over and over again. Similarly, come up with some clever designs for T-shirts, mugs, and other items, and people might buy those items at sites such as and At Etsy and other sites, people can buy your design in .PDF or another form to use on wedding invitations or other print items. You might also write a short book or guide and self-publish it as an e-book on sites such as Amazon.
  • Annuities: If you take a large sum and buy one or more fixed annuities with it, you can set yourself up to receive monthly infusions of cash for the rest of your life, starting now or when you retire or even a certain number of years after you retire. As an example, a 65-year-old man could get around $540 per month for the rest of his life for $100,000, while a 70-year-old married couple could spend $200,000 to get around $1,030 each month as long as one or both of them are living.
  • A reverse mortgage: Reverse mortgages have their downsides and are not for everyone, but one might serve you well, depending on your situation. It involves getting a loan from a financial institution that pays you a certain sum each month (or, in some cases, as a lump sum), with your home as collateral. The loan doesn't have to be repaid until you're no longer living in the home, and it's often repaid through the sale of the home.
  • Rented space: You can collect money relatively easily by renting out space in your home or your entire home for a few days and nights a year or for many weeks or months. You might list your space on sites such as,, and Even driveway space or garages can be rented out in some markets.

Invest in yourself

Finally, a great way to put your money to work for you is to invest in yourself. This can help you get hired, promoted, and into new, more satisfying, and more lucrative careers. You might take some courses and earn a new certification or degree to make yourself more qualified for higher positions at work, or you might aim for an entirely new field of work.

Learning a new language might be the ticket to more or better opportunities, and in some cases simply spending money on a fresher, more professional wardrobe can make a difference. Here's a last idea: If you find yourself frequently feeling down and pessimistic about your future, invest in some counseling. That could help you turn yourself around and get ahead in life.

Spending just $500 or $2,000 on yourself might net you much more than that through a better job. And the more you earn, the more you'll be able to save and invest to reach your financial goals.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Selena Maranjian owns shares of AbbVie, Amazon, AT&T, Ford, IBM, Johnson & Johnson, and Verizon Communications. The Motley Fool owns shares of and recommends Amazon and Etsy. The Motley Fool is short shares of IBM. The Motley Fool recommends 3M, Johnson & Johnson, and Verizon Communications and recommends the following options: long January 2020 $200 calls on IBM, short January 2020 $200 puts on IBM, and short January 2020 $155 calls on IBM. The Motley Fool has a disclosure policy.


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