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Optimize the Passive Income on Your Short-Term Cash

When I wrote my orginal post Show Me The Money: Six Strategies to Put Your Cash to Work, one of the strategies I included was leveraging General Electric's high-yield money market account for the cash you want to keep readily available (i.e., cash you might need to access in the next 3 to 12 months). But GE has shut that program down as an overall strategy shift away from its GE Capital business, and so I was left searching for an alternative. In this post I'll detail what corporate money market accounts are, how they work, how they differ from other types of savings or income generating accounts, and which the best alternative is. I'll also tell you what I ultimately ended up deciding to do, which was different than I expected.

Why you should care about this at all:

One of the mistakes I made in my 20s was not being curious enough about financial instruments, and how I could leverage them to reach my personal goals faster. I was so focused on building startups that I didn't pay enough attention to how to optimize my investments. I set out to change that in my 30s, and I've been blogging about it in the hopes that anyone else who isn't yet leveraging these tools can learn about and use them.

As with anything in life, from optimizing your health to optimizing your finances, you have to start with a goal. My family's financial goal is currently optimized for asset growth, with a secondary focus of passive income generation. Since we're still (relatively) young, we're willing to take aggressive stances on both. Here's how this breaks down for us:

Alternative Investments: Peer-to-Peer Lending

On Minimalist Wealth

Key Points:

+P2P Lending has a history of high returns and low volatility, particularly for larger investors.

+The time and skill requirement is low, making it great for passive investors.

-It is tax-inefficient, particularly for investors of high risk loans

A unique way of investing that has been around for less than a decade is Peer-to-Peer Lending. In P2P lending, loan-seekers seek loans directly from individuals rather than banks (who loan money using deposits from individuals). This is how the process works:

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