Most of us spend over $5.00 a day on coffee or lunch — can this be a way to save more money. Of course, brown bag your lunch and make your own coffee. If you saved $5.00 for 1 year you will earn a total of $1825. Now take your year’s saving of $1825 and put it in a CD. I will use a current CD to show you how you are earning more money. If you took the current CD offered by TD Bank, which is a 60 mo CD at 3.00% (interest rate) at the end of the CD term you will have earned $2,120.33. That’s an interest income of $187.33.

The example above is just from money saved from brown bagging your lunch and making your own coffee. What if you cut expenses elsewhere? Let’s say you save $2500 in year 2009 from cutting expenses and put that in a CD. Your total earnings will be a total of $2,904.57.

The key to saving money is depositing your money where it can earn interest. As your deposits grow, interest on that cash grows. Now, that’s interest income.

How Do I Save More Money

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For some low interest rates are good. Like when you seeking a mortgage, but for others (like me) low interest rates are the kiss of death. Experts are all over the place when asked the question “when will interest rates increase“? On the bright side, some say, Yes. Others predict an increase in the early part of 2010. Why do people want interest rates to increase? Some of us live on interest income. What is interest income? Interest income is a type of income generated from your investments usually from a bank. Interest income can come from bank deposits, bonds, and treasury bills. Bank deposits includes saving accounts, money market accounts, CDs, and sometimes checking account. When the feds lower interest rates, banks usually lower interest rates it pays out to account holders. Therefore when the feds raise interest rates, banks usually raise interest rates it pays out to account holders.

Please Increase Interest Rates

Back in 2007 and early part of 2008 I was earning nearly $600 per month in interest income. Now, with interest rates so lower I’m barley making $300 per month. The only reason why I have managed to save 1/2 my interest income is from moving money all over the place. I have learned alot in the process. Instead of just bumping a bunch of money in a money market account, I am now investing in CDs with at the moment are offering better interest rates. Now, that I understand other investment products I’m looking forward to the increase of interest rates. I’m sure I will surpass $600 per/month.

Predictions for the Predictors on the Increase of Interest Rates

I don’t know how true are accurate these numbers are because experts seem to flip-flop on their own numbers. However, I have seen predictions that interest rates will increase by October 2009. How much? Your guess is as good as any one’s else. Below is a graph of interest rate movement from Feb 07 thur Jul 09 (the graph is on 6 mo CDs).

Six Month Certificate of Deposit Interest Rate

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What is a bond? Really a bond is a IOU. Governments have bonds that they issue. All levels of governments have bonds to included Federal, State and Municipal. Also known as Federal Bonds, State Bonds, and Municipal Bonds. When you invest in a bond you are purchasing shares. In return for your investment the investor agrees to pay you an interest rate (rate of return) at a future date.

Bonds have been around for years. In the past we had war bonds. However, bonds have become a little more complicated. Bonds now have ratings ranging from junk bonds to triple “A” bonds. The ratings system work like this — the higher the grade or rating, the lower the interest. Here’s why. Bonds with higher grade have less risk. Therefore, interest rates on high grade bonds pay less interest. On the other hand, bonds with lower ratings, like junk bonds pay a higher rate of return (higher interest rate).

Finance & Investment Tips : What Is A Bond?

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What is Passive Income? Passive income is money earn through sources that doesn’t require you to work or requires very little work on your part. There are many benefits to earning passive income. The main benefit is that you earn additional money. The other benefit is that you can earn while focus on something else (or sleep). In today economy passive income sources may require a little work at first, but once you get rolling it’s very easy to maintain.

Passive Income Opportunities – 2 Passive Income Ideas

Passive Income Opportunity 1 –  are the new trending way to earn passive income. Once you set up a web site the affiliate program does the rest. The benefits of affiliate programs are:

• You don’t have to pre-purchase merchandise
• You don’t have to track sales
• You don’t have to interact with customers

Some may say the downside to affiliate programs is that you only receive a set commission. However, this is a good passive income opportunity in my opinion.

Passive Income Opportunity 2 – Advertising Programs is another great way to earn passive income. Again, once you set up a web site the advertiser does the rest. One big ad programs is Google Adsense. The benefits of an ad program is similar to affiliate programs without the selling of merchandise from your site. With ad programs all you do is tell the visit about the product or service and earn a commission for doing so.

Passive Income Opportunity 3 – Interest Income is another way to earn passive income. Interest income is earned by investments and bank accounts. Although your initial investment may come from hard earned money, the interest that you receive is passive income. Some people, especially those who have retired live off of interest income. Therefore, it’s best to start creating interest income at a younger age and reap the benefits later.

Those are the three top ways to earn passive income. (Special note: when I refer to setting up a web site that includes blogs).

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What is a mutual fund? A mutual fund is a pool of money that is contributed by many smaller investors (and some large investors) to create one assets that is managed by a broker or mutual fund manager. Mutual funds can have thousands of investors. The mutual fund manager makes the decision as to where the pool of money will be invested on behalf of the many different contributor of the mutual fund. Mutual funds typically invest in several different types of investments, they also have guidelines as to which investments they make. Mutual funds are graded by benchmarks. Mutual fund benchmarks are often compared to other stock index — like the S&P 500.

When investing in a mutual fund you purchase shares. The benefits of investing in a mutual fund are:

• When you purchase shares in a mutual fund you are automatically diversifying your portfolio
• You can enter the stock market at a lower price point when you invest in a mutual fund
• Mutual Funds are managed by a personal financial experts

Mutual Funds Explained in Simple Dollar Terms

http://www.youtube.com/watch?v=ky7GWCksyRg

However, mutual funds are not FDIC insured.

What Is a No Load Mutual Fund?

What is a No load mutual fund? A no-load mutual fund is a fund shares sold without a commission or sales charge associated. No load mutual funds are sold directly to the investor vs. sold through a second party. When a loaded fund shares are sold or purchased there is a commission charge.

What Is A Socially Conscious Mutual Fund?

What is a socially conscious mutual fund? A socially conscious mutual fund is a fund that is environmentally conscious. Here is a list of 12 socially conscious mutual funds:

12 Socially Conscious Mutual Funds

• Ariel Investments LLC
• Pax World Balanced
• Parnassus Equity Income
• Neuberger Berman Socially Responsive
• Calvert Social Investment
• CRA Qualified Investment
• Domini Social
• Access Capital Strategies Community Investment
• TIAA-CREF
• New Alternatives
• Sentineal Sustainable Core Opportunities
• Winslow Green Growth

Buying Mutual Funds Online

There are online sites like Scottrade that allow you to purchase shares in mutual funds through their online services.

Here a list of Best Rated Mutual Funds — from moneycentral MSN. This is a list of mutual funds in the category of Large Growth Funds:

Large Growth Funds – Best Rated Mutual Funds

• Direxion
• Rydex Dynamic
• Profunds Ultra
• Jordan Opportunity
• Alger Spectra A
• U.S. Global Investors Global MegaTrends
• Alger Spectra C

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We should all know by now that Wachovia is now a Wells Fargo. If you didn’t know, here is an article on why Wachovia was taken over by Wells Fargo Wells Fargo take over of Wachovia Bank. Nevertheless, Wachovia/Wells Fargo Bank has a new savings program called “Way2Save“. Way2Save is a new program that allows you to automatically save with everyday purchases you make.

Similar the the “Keep the Changes” program by Bank of American, Wachovia’s Way2Save helps you automatically save without changing your everyday norms or spending habits. Reports suggest that over 2 million Wachovia customers are already using the Way2Save program. Here’s the ins and outs of the new Way2Save program from Wachovia/Wells Fargo Bank:

• Sign up for a Way2Save account — if you do not have a Wachovia checking account you will need to open one.
• Make a purchases – Everytime you make a purchase with your Wachovia Checking Account Card $1 from your checking account will be transfer into your Way2Save account. Meaning the amount of your purchase + $1.00 will be deducted from your checking account. Making a purchase includes: Paying bills online and automatic debit payments.
• Way2Save Savings – Currently the interest rate on your Way2Save account is at 5.00%.

Other Way2Save Rules and Regulations:

• If your checking account does not have sufficient funds the transfer will be cancel — The $1 transfer will not occur.
• Your Way2Save account is funded by $1 transfers based off your purchases. However, you can deposit an additional $100 every year.
• The 5.00% interest rate is a special rate for the 1st year. Year 2 and 3 interest rate is 2.00%. By year 4 the interest rate will be the same as a premium savings account.

For more information on the Way2Save program go to Way2Save Program at Wachovia Bank

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