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- If you got married or had a birthday recently, you might be sitting on cash gifts.
- Financial pros say you can invest in a side hustle or buy crypto (without risking your savings).
- Or, keep the money in a high-yield account or pay off debt to build wealth over the long term.
- Compare savings account rates & offers in your area »
Over the last few years, I’ve received a lot of cash gifts from friends and family for different celebrations in my life. I got engaged, had a couple of birthdays, and ended up eloping during the pandemic. In order to keep track of these cash gifts and not spend them on late-night takeout, I made a separate savings account called “Gifts” for my cash.
Now that the celebrations are over and my savings account’s interest rate has fallen (to 0.5%), I wondered if there was something better I could do with this gifted money to turn it into a larger sum.
I asked experts, and they shared five tips for how to grow your cash gifts to make more money.
1. Pay off debt
One recommendation I never would have considered was to use my gift money to pay off outstanding debt.
Financial advisor Jarret Austin says that debt repayment isn’t the first thought that comes to mind when it comes to turning money into more money. However, “When you pay off debt, you’re saving yourself from paying additional interest. In the long run, you’ll have more money to use in the future by paying off debt,” says Austin.
2. Invest in a side hustle
An idea I really liked was to invest in something that either I really enjoy or my partner and I enjoy together — and that brings in cash, like a fun side hustle.
“Buy tools a little at a time and build a website when you have time. Your business doesn’t have to be expensive to give you a good return, especially if you’re just starting out,” says financial planner Jim Pendergast. ” For example, if you want to start a bakery, do it out of your own home for a while. If you want to do woodwork, set up your garage as your home base.”
3. Fund or open a Roth IRA
If you’re looking to catch up on or even start saving for retirement, Robert Gordon, a financial planner, says that putting cash gifts into a Roth IRA (if you’re eligible) is a smart move.
“Depending on the size of the cash gift and your income level, you could open and fund a Roth IRA. Be aware of the annual contribution limit for an IRA, which is $6,00 ($7,000 if you’re age 50 or older) ,” says Gordon.
4. Try your hand at cryptocurrency
If you’ve been thinking about investing in cryptocurrency but don’t want to invest money that’s earmarked for specific goals, consider using some of your gift money to “play” with crypto. Keep in mind that crypto is a volatile investment, and you may end up losing your cash.
Financial planner Kathryn Hauer recommends doing some research on the best coins, then setting up an account on a credible website where you can buy cryptocurrency.
5. Keep the money in a high-yield account
High-yield savings accounts and CDs are still a good, safe option for making money on your money. Even though interest rates are low, Hauer says, it’s still a worthwhile option to consider.
“You can start depositing your gift cash in one of those
and grow your money slowly but surely,” says Hauer. There’s no risk involved.