What should you do when you strike it rich? – 7 ways to benefit from windfalls, bonuses, and other ‘found’ money!

pennys from heavenTonight’s episode of Seinfeld was a rerun from the mid-90s when Jerry receives a large check (so large that Kramer is surprised) for his performance . It’s only part one of a two-parter. But it got me wondering about what most people do when they receive a windfall. Management of your new found resources can be a problem; and it’s a problem that I share with those who get annual bonuses or special rewards, prizes, unexpected windfalls, inheritances, etc..

It’s easy to start planning what you are going to do with the money and quickly you forget how hard it was to come by, or how long you had to wait. In Seinfeld, Jerry decides to go and buy a brand-new Cadillac for his father with the money; he doesn’t even think about other options because he feels ‘rich’. Isn’t it interesting how such income can totally shape your perception of being ‘rich’?

For those of you who have been following my progress this past year, you will have realized that I have begun to accumulate something of a cash position: currently about $7,139.05 worth actually. Of course, this is the gross amount and there have been a number of deductions from the amount for various expenses including taxes, fees, hosting, equipment purchases, etc.. So the total amount isn’t exactly that much. I didn’t keep an exact tracking of the costs either, though from January 1st, I already promised to do that.

To make matters more confusing, some of the earnings are in US$ while others have been paid in the local currency here. And the money resides in several different places as well: my broker accounts, paypal accounts, and several different bank accounts. Rather than splurge on dual 24″ monitors (though I drool), I’ve taken a very much wait-and-see attitude. I’ve been slowly consolidating the money in several places only, and evaluating options for generating additional revenue.

Currently I’m considering five different ways I could spend the money, and I’ll suggest some others that I have already ruled out.

1. Stashing it in the bank: if the amount isn’t large, and the outlook is uncertain (as it is here in Taiwan, with several major elections coming, rising oil/gold prices along with jumping interest rates, it can be quite a good choice to park money in the bank for the short term. The disadvantage is that the money actually loses value as governments tend to devalue currency over the long term via interest rates that don’t keep up with rising prices (and prices are rising F-A-S-T in many parts of the world for many products).

Verdict: For smallish amounts, it’s about the only thing to do other than spend it. I’ve definitely done this.

2. A Term Deposit: A typical bank account pays a pitiful amount of interest: in Taiwan it’s about 1/4% per annum for a standard bank account. This devalues your coin faster than you can say ‘Shinkansen Bullet Train’. Parking it in some fixed term CDs or ‘term deposits’ may be a better choice: rates are approximately 2% (yes, 2%) higher and edging up gradually as inflation is rising. With a choice of fixed rates vs. floating rates, it’s always wise in an rising interest rate environment to choose floating rates to benefit from rises. I noted that today in the bank the fixed rate vs. floating rate term deposits didn’t vary for periods longer than 12 months. Wonder what that means…

Verdict: For largish amounts, it may be worthwhile for longer terms, but don’t park it too long. I’ve also done this.

3. Money market accounts have similar benefits to bank accounts, and indeed, with TDAmeritrade I’ve parked some of the capital in their money market account, which accrues a smallish interest amount every month until the money is enough to do something with. Of course, you need to check WHICH money market account offers the best and most secure deals. (See what a money market account is ).

Verdict: A good way to earn interest payments from your broker, but has its limitations and some risks. I’m doing this right now.

4. Dividend Investing: For a little more risk, though, I’ve been looking at purchasing stocks with Dividends. I’ve always been attracted to these because they are an additional way to earn money from the total stock return ever since my days as a Motley Fool member. Of course, the question of tax efficiency creeps in, it may not be a good choice for everyone. But as part of a general stock portfolio: the triple whammy of capital growth, share re-purchasing, and dividend increases is QUITE attractive. There is the big danger though that you will LOSE money in the short to long term, if you take unforeseen risks or the proverbial s**t hits the fan for the companies in your portfolio.

Verdict: Definitely more potential for earning a profit, but risks are similarly higher. Not for the faint hearted! I’ve done this for quite a long time, with varying degrees of success.

5. Investing in your business: for businesses that are expanding, capital can become scarce at times. Even our business which has been around in various guises for 7 years, sometimes needs capital to furnish expansion. We’ve been lucky as our business really is a light business – it’s service-based – so most of its non-startup capital requirements were funded by its ongoing revenue. But it’s not hard to imagine us needing money for moving to larger premises or purchasing or setting up a branch school in a nearby locale.

Verdict: Much more risk than #5, but the benefits of expanding your profits from your business can be exponential. Of course, the failure rate of new business is high. Done it once or twice.

6. Lending Money: there are a variety of methods now in which small lenders can take on private loans as individuals or syndicates through Zopa (in the UK/US), Prosper, etc.. At the moment, I’m prevented by my residence status from being able to open such accounts, but if I were relocating to either of these countries, this is one avenue I would actively pursue to create additional income. Zopa has tiers of credit markets that would allow you to spread your risk over different types of loans, and perhaps earn interest above that paid by the bank for little extra risk.

Verdict: I’d love to do this, but I’m not legally able to yet. I’ve done lending on Kiva but that’s for a totally different reason. Done it privately both successfully and not .

7. Purchasing websites: There are many quality websites, blogs and forums available on different auction sites including SitePoint and Digital Forums that offer additional options for creating additional streams of revenue. Purchasing an active and reputable website with established revenue streams (from text ads, linking, etc..) could be a risky but exciting way to increase the returns on your investment. I had actively considered purchasing one website BobMeetsWorld when that came up for sale recently. While the actual revenue was under-optimized, it was a PR5 blog that was selling for a good price. Of course, with this active blog already, I’d have been hard pressed to find the time to write challenging content.

Verdict: I’ve considered this, but the risk is considerable. Many auctions are fraught with fraudulent information and listings, esp. as sellers try to justify the higher prices for their websites. It’s even more difficult to verify the reality unless you actually know the website and the website owner. I’ve never done this.

My own decisions: It’s all personal!

I am now preferring to invest whatever money I have to create revenue, whether it is from bank accounts, loans, stocks, websites, etc.. I’m very much concerned that too much of the retail investment market is focused on gains for tomorrow that may or may never appear, and too many employees are invested heavily in stocks, funds, pension schemes that are promising rates of return that are not feasible. So I’m focused on earning income from non-work activities right now so that I will have the skill, knowledge, and income to support a much bigger program of income generation.

In reality, what have I done with the extra income so far? About $2,300 is in a money market account, earning a little interest in my broker’s account. I have been planning to invest this money by buying some Dogs of the Dow stocks to get a better return. And there are some good value stocks that have been beaten down sorely by the current problems in the property market, including Citibank and JPM. The current dogs are Citigroup; Pfizer; General Motors; Altria; Verizon; AT&T; DuPont; JP Morgan Chase; General Electric; and Home Depot .

Some more money is now being turned into a ‘term deposit’ with a term of one year based on a floating rate with current interest rates of about 2.33% for 12 months. Some of the remaining 20% will be kept in a cash position to finance growth and expenses for the website: including finding opportunities to expand my online empire! I’ll let you know how I fare.

Tell me what you did with your bonuses! I haven’t got mine yet… Chinese New Year is coming soonish! Let me know what you did! I’d be delighted to know.

ABCs of Promoting your business, website or charity: Don’t forget the BIG PICTURE!

statement

After doing a promotion this summer, I was having a chat with a friend about the value of doing promotional activities for your business or charity organization. While I don’t recall the exact content of the discussion, it was quite a while ago, it emerged that many organizations actually want to quantify the value of such activities in terms of cents and dollars or new customers or whatever criteria they choose.

Intangible Qualities vs. Tangible Benefits

While this is a natural response, I felt that it overlooks a number of non-tangible qualities that are quite essential to doing business because you are always going to be doing business with people. The list of non-tangible qualities was quite long, including relationship building, image building, branding, etc.. In fact, I was quite surprised that so many organizations would focus on the tangibles, but miss the more important intangibles.

A Bake Sale vs. A Donation Drive

My friend gave me an example: an organization for Women’s Aid (for example) would hold a bake sale in which members of the support group would bake stuff at home and bring the goodies to sell on a Saturday afternoon thereby raising funds for the activities of the groups.

A simple financial analysis would suggest that simply donating the money by the members that would have been originally been used to buy the ingredients for the bake-out would be more cost effective, time efficient, and environmentally better:

…there are costs that are attached to each individual in a group of 20 going out and buying the ingredients to make 20 different dishes. They then spend their time, energy costs and creativity to make these products. Then they wrap and transport them (both at additional cost) to the venue; where they then sell them for non-commercial prices and are themselves not paid for that additional time. It’s this resulting revenue that is donated to the charity.

As an (obviously more cost effective and efficient) alternative, members would simply take the money for the ingredients, transport, fuel, and their time; and donate the resulting amount to the charity. They’d then go home, a little richer in spirit (perhaps), but a little poorer as a group: they’d not stoked the group’s dynamics.

100-1774Group Dynamics: A Primary Non-Tangible Benefit

What it neglects to count are the bonds of friendship within the group that are enhanced by volunteers sharing a task from conception to execution. It ignores the fact that such relationships will help to strengthen the group as they pursue their mission to help those in need. In addition, the fact that such effort is expended creates a non-tangible value that is added to the items at the sale, when people who are purchasing them realize that people have donated not just their money, but their time and their life spirit, to create a handcrafted item, made with love and care.

This didn’t escape our own business organization either. As, in our promotion, we organized a lesson that involved teaching some popular fast food items (things we knew children already enjoyed) and showing them how to order and pay for these items in English. It was designed to be practical, enjoyable and educational. Though we were not a charity, we organized the activity to publicize our business. In fact, the original event was held in a local fast food restaurant.

[Click to watch the video of our presentation! Continue the story after the video]

[flashvideo filename=http://www.nozkidz.com/wp-content/movies/TommysBirthday.flv /]

ABCs of Promotional Events

Attracting: the overt purpose was, of course, to attract new customers to come and ask about our classes. So we prepared banners, flyers, a welcoming table and an entertaining presentation. In addition, we also video-taped the presentation;

newsletter 3  Building: but we were also conscious that inviting our own students would serve an additional but important aspect, even though the cost would increase the burden on our budget: we would be building ‘customer loyalty’ and developing customer relationships by including those students who were already our customers; and

  Collaborating: the teacher team also benefited extensively by working collaboratively on a project that required a lot of time and creativity to put together; relationships were enhanced, bonds were strengthened; and pleasure was taken in the fact that, even though the first was a ‘failure’, our own students had a great time, we raised a bit of publicity, and we had great fun.

100-1776Promotions: Always Keep the Long Term in View

One of the benefits that played out over a much longer period, though, came as a surprise to all of the team members at the business: we were able to re-run the presentation a few weeks’ later, and with the information we gained about holding the activity, we were MUCH more able to capitalize on the promotional abilities than the first time round. On the second round, we were able to get a few more ‘leads’ than the first time. But even then, the benefits weren’t realized.

100-1777A few months later, when the beginning of semester came around, we were inundated daily with queries for information about our courses, interviews with students, phone calls, etc.. at one point we thought we were going to go crazy there were so many calls. It was clear from the work we had done on the website, and the newsletter, that when combined with the actual face-to-face promotions, we sowed the seeds of our recovery. It just took a few months for the seeds to germinate, before we were able to cultivate the shoots, and harvest the crops.

And what about online? You may well ask…

Doesn’t the same set of rules apply online? There are many community-based websites where content is created by amateurs from scratch, despite the fact that professionals would do the job in much better order. Still, the amateurs go on to become experts in their community, new members join because of the attraction of these communities, building of relationships within the communities and possibilities for collaboration even for the weaker members.

Even on blogs, visitors sign up for memberships so they can comment, write extensive posts (or even guest posts), and join in activities, competitions and other events; on many occasions, they are competing for tangible returns; but aren’t the intangible benefits much greater, in the long term? Look at blogs whose comments run to 100 or 200 comments or where forums have fostered communities…

And so…?

So the next time you plan a promotional activity for your website, business or charity, when counting the cost of the event and setting the numerical (whether financial or not) goals, don’t forget that the intangible benefits of such promotional activities will always outweigh the tangible costs.

Monetizing Makeover: Making Money in the NoFollow Era

This post has been edited since it was first published (by mistake!)

For many bloggers, making money was easy: write a not-infrequent blog, add links from a company selling links, ads from Adsense, and sponsored posts from any of a dozen companies or more. Bang! After a few months, you could earn a couple hundred dollars a month. Or more. Sometimes much more…

But with the Google Grinch coming to town in time for X’mas, the whole ball game has been upended by the demands of the Google Grinch that we all use ‘no_follow’.

There have been two opposite reactions to this:

  • Roll over, …
  • Barking and Biting…

But guess what? With all the recent changes at Google’s Search Engine, and the stricter payments for two bit websites like this, we’re needing to find new profitable ways to make money online, especially as ‘serious’ websites like Engadget still get the old style AdSense ads with large clickable areas (unlike smaller websites that get a tougher deal).

And the increasingly poor click rates on ads is not helping. It’s not good for bloggers in the World of Adsense. But now, I’m beginning to see a way to balance PR’s demands for NoFollow links with generating revenue that is better, more secure, and more stable than AdSense.

What is Scratchback?

scratchback

Well… take a look at this blog. I’ve been running Scratchback for a while on this blog (to no avail, yet!), but I’m planning to give the whole image an upgrade. It will work very well as a way to provide links for traffic (but not SEO) on your blog. It’s integrated with your blog as a plugin, and you can vary the rates. In addition, the commission is reasonable. So it should prove a good nofollow option for blogs currently using Text Link Ads. Scratchback does not currently operate an affiliate program to my knowledge. I don’t like the idea of tipping so much as that is particularly a North American phenomenon, so I’m looking to change the language on the advertisement!

TTZ Media

TTZ Media is an affiliate program that allows you to place ads to products that are dynamically updated to your blog via scripts. I’ve been running this for a while, though one of the reasons I ran it initially was to add visual variety, it has been generating a little income from clicks. I’ve not worked out the best positions for the adverts, and it works better on an appropriate blog that has a gadgets angle of some sort: Tech, Travel, Video, etc…

ttz media sample

The ads are quite sensible, and the click pay out is fixed… Both of these offer real products, real advertising, and real rates. I’ve not done well on clicks yet, because of poor placement, but this will work itself out.

MillionaireMate Affiliatesmillionairemates

These ads have been running on my sidebar for a while now. I wanted to try it out to see how people would respond to the ads. While I was aware that they offer AdultFriendFinder, I was also surprised to find out that they offer quite respectable matchmaking websites for all sorts of groups. Hence, when I found MillionaireMates, I thought it would be worth a try. And the results? Well, it’s getting a reaction of sorts from both clicks and viewers.

Apparently, one viewer thought that the picture was somewhat risque! Well, only about as risque as a Vogue magazine… But still… I should try to vary the pictures, esp. the age groups, gender, clothing… to see which elicits a stronger response. This poor visitor was prompted to turn on her ad blocker! I don’t quite know why this image is a problem…

Anyway, I’m now changing the image to something else. Apparently, experimenting is necessary for affiliate campaigns. European sensibilities in this area tend to be different from North American ones. As of now, though, I’ve not made any conversions. If I still can’t in a month or so, I may find another replacement.

AdToll: It won’t take its toll on bloggers

AdToll is also a late comer to the market, but it offers a number of ways you can tweak your ads for you blog, as well as let you determine what advertisers have to pay to be on your website. I haven’t been getting a lot ads from them yet, but I did get two that were interested in my space in quite a short time. So, I have made a little money from this system. There is an affiliate program, too that works quite well.

ads

I’ve included the video for your information, but mostly because I think it’s quite good.

 

 

These four ways are ongoing experiments on this blog. I hope that you find this of value. I’ve had some results from each of them, and given the traffic levels on this blog, the results are to be expected. I will be trying to optimize placement over the next few months, and I’m looking forward to changing theme after Christmas is over on January 6th. If you’re looking to monetize a website that is NOT a blog, then perhaps each of these methods would be effective as well.With Google recently enforcing nofollow, Izea planning to go the same way, it’s wise to get a start on planning for income from your website in the days after nofollow goes mainstream.