Blogging for a living is quickly becoming a popular career in the developed world.
It is no longer just a side hustle for college students or a way of making money for stay at home moms.
Statistically, more people are quitting their 9-5 jobs to focus on self-employment through blogging and writing books.
However, there are some drawbacks that come with such professions, which individuals must circumvent to be as successful or better than their employed counterparts.
One of the challenges that come with self-employment through blogging is disciplined saving and investing.
And without these two, it is very difficult to succeed as a blogger.
Therefore, it is important to practice saving and investing your blog earnings as your business grows because just like any other industry, economic uncertainties can change the fortunes of your blog leaving you short of cash.
So, how can you get around this problem?
The first thing to do is to establish a strategy for savings and investing.
Determine how much of your blog earnings will go to a fixed deposit account, bonds investments, index funds, and stocks, among other instruments.
Your strategy also needs to include your plan for retirement, which means that tax-friendly savings accounts should be part of it.
Put some money in a Tax-Free Savings Account (TFSA)
Nearly every country has its own version of a tax-friendly savings account created specifically for retirement savings.
In the US, you will find the 401ks and IRAs (Individual Retirement Accounts).
In Canada, people can take advantage of the TFSA (Tax-Free Savings Account), but this is not the only option.
Once you have maxed out this avenue, in Canada you can use a Registered Retirement Savings Plan (RRSP) to increase their present savings on taxes.
The RRSP is a savings account that allows individuals to lower the taxable income in the present.
Holders of an RSSP account can deduct the higher of a stated maximum from their annual income or 18% of their previous year’s income, which will then be taxed after retirement.
One good thing about this is that since after retirement your income will be lower, the effective tax rate is also low.
Invest in Index Funds and Bonds
Depending on the level of your blog earnings, you might find index funds or bonds interesting especially those who want to grow their retirement wealth passively.
Government treasuries and Municipal bonds offer investors an avenue for low risk, modest return investments.
These can be very good if you are already approaching retirement age.
On the other hand, the younger generation could capitalize on the higher returns of index funds without having to concern themselves with the intricacies of the stock market.
In short, you can put your money in an index fund and watch it grow year after year while you continue making more through your blogs.
Try to juggle with stocks
The other and more risky option is trying your luck in the stock market.
Most successful investors will advise you to find a registered investment expert but others also choose to go it alone.
This can be challenging but is also exciting especially when your stock picks turn out to be correct.
The stock market can give you returns as high as 50%, 100% or even 200% and higher if you are lucky, but you can also lose as much as 50%, 70% or even 90% under adverse circumstances.
Index Funds, on the other hand, can give you a return of 7%-9%, or higher occasionally.
And treasuries and municipal bonds can give you a return of 2% to 5% depending on the Federal Funds rate.
In summary, it is important to find a stable strategy for investing your blog earnings.
Do not over-invest or over save. The other extreme is also not recommended.
Try to find the right balance depending on the success of your blog.
And check out this popular article 10 Things a Small Business Shouldn’t Waste Money on.