The worst ways to make money in 2011
Need to make some extra money? Here's how NOT to do it...
Wouldn’t it be nice if someone told you your pay was going to double from next month? Think of what you could do with all that money. Maybe you’d go on a fancy holiday or simply put the money towards paying off your mortgage and other household bills.
Sadly, however, the chances of your salary doubling next month are likely to be pretty slim. So instead, you might be trying to conjure up other ways to make some extra money this year. Here, I’m going to reveal five ways you shouldn’t try to earn some extra cash in 2011.
1. Pyramid schemes
If you’re strapped for cash, the chance to make some extra money fast is likely to appeal.
Pyramid schemes supposedly do just this. They require you to pay a fee upfront to join a scheme where you’ll be able to earn bags of money by simply recruiting other people into the scheme.
However, in reality, these schemes are illegal and the chances of you making any money are minimal. Although the people at the top of the ‘pyramid’ might make some cash, it won’t be much. And as soon as the pyramid stops growing, there’s no money to be made. So don’t be tempted to join up!
2. Work-at-home schemes
This type of scheme has been around for as long as I can remember. But rising unemployment levels have given the scheme more momentum.
Typically, work-at-home schemes promise a large income for very little work, such as envelope stuffing or craft assembly work (making toys and gifts). You’ll often spot advertisements for this type of work on lampposts, in shop windows, or in magazines and newspapers.
However, what you won’t be told is that you’ll have to pay upfront for supplies to carry out the job or cover hidden costs. And once you’ve completed your work, you may find your ‘employer’ refuses to pay you, claiming your work isn’t up to scratch.
Alternatively, similar to pyramid schemes, you’ll be asked to post advertisements to recruit other people, and you won’t earn any cash until you’ve signed up a certain number of people.
Find out more in Don’t get ripped off by this employment scam.
3. Dodgy loans
Okay, so technically this isn’t a way of making money, but it is a way to get your hands on extra cash.
Payday loans are cash advances on your salary you’re expecting at the end of the month. Typically, you can borrow up to £1,000 and applying for a loan takes no time at all. Usually the cash will be transferred into your bank account the same day. What’s more, no credit checks will be carried out so it can be a very attractive way to get some extra money.
Rachel Robson reveals five of the worst scams around...
However, the interest rates charged on payday loans are extortionate – we’re talking in the region of 1,737%! It can also be extremely easy to roll over your loan for another month, meaning you can end up having to pay out a hefty sum of money to pay the loan back. So steer clear.
You should also avoid other dodgy loans, such as those offered by loan sharks.
4. Gambling
Gambling might seem like an easy way to make a quick quid or two, but it’s incredibly risky and as a result, you could end up losing thousands and thousands of pounds rather than making any.
Even if you do win money, there will always be the temptation to gamble a little bit more with the hope of winning even more. This could lead you down a very slippery slope – so don’t take the risk.
5. Structured products
To boost your income even further, you might consider a little investing. However, opting for a structured product is unlikely to be the best solution.
That’s because structured products can be very difficult to understand. In theory, they should allow you to benefit from the upside of the stock market, but protect your capital from the downside risk.
However, the guarantee that comes with them isn’t always worth the paper it’s written on - as many savers found out with the collapse of Lehman’s in 2008. Lehman’s had underwritten numerous capital investments sold in the UK, but when it collapsed, thousands of investors lost their money.
So as a rule of thumb, if you’re not exactly sure how these products (or any other investment products for that matter) work, steer clear. For a better way to invest, take a look at our how to guide: Make money from the stock market.
Recent question on this topic
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There is a better way
Okay, so now you know the worst ways to make some extra cash. But are there any better ways? Here at lovemoney.com, we’ve written several articles about the best ways to boost your income. So make sure you have a read of 10 ways to make money in your lunch hour and Rent your way to a fortune.
And don’t forget to check out our how to guide: Make some extra money.
Finally, don’t forget that the financial products you use can also help you to earn money. So don’t leave your savings languishing in an account paying next to nothing! Earn some interest instead. Interest rates might not be great right now, but earning something is better than earning nothing. Read The best savings accounts for 2011 for some top tips.
Similarly, take advantage of offers from banks such as £100 cash for signing up. Both the First Direct 1st Account and the Santander Preferred In-Credit Rate Account give you £100 if you open either account and pay £1,500 or £1,000 respectively into the account each month. Read more about these accounts in The best current accounts for 2011.
And if you’re always spending on a credit card but you religiously pay off the balance in full each month, make sure you’re being rewarded for your efforts. The American Express Platinum Cashback Credit Card pays 5% cashback for the first three months and up to 1.25% after that! Find out more in The best credit cards for spending.
More: The biggest regrets you’ll have in 2011 | Save £2,011 in 2011
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I work part time as an authorised distributor with Utility Warehouse Discount Club which allows me to help my family, friends and many others to save money on all their utility and household bills - including shopping and petrol. As I save my customers between £500 - £1000 per year, I can effectively help them to be better off this year - even after the effects of the recent increase in VAT. It's also a fantastic business opportunity for those who either want to have their own business, make some extra money working for themselves, either part-time or full-time, or who want to be financially free. And for a limited time only, (until 3rd April 2011) the investment fee has been reduced [b]from £199.75 to just £100[/b] - however, simply by gathering just 12 customers in your first 90 days, you qualify for a [b]£500 starter bonus[/b]! It allows ordinary people to start their own part-time 'mini franchise' working from home from as little as an extra 5 hours a week. Working in partnership with the [b]UK[/b]'s fastest growing discount club, the Utility Warehouse, you can not only earn a lot more this year than last year, but you can also grow an extra monthly residual income based on an average of around 3.5% of all your customers monthly bills. Here are just some of the benefits as a distributor... 1. You can get a pay rise - every MONTH as you add more and more new customers each month. 2. You can reduce or reclaim your tax paid under your PAYE by reclaiming against your legitimate business expenses. 3. It's so much more than a part-time job - it's your own business or 'personal' franchise. And if you work it properly for 4-5 years you can eventually sack your boss and carry on doing it full time. 4. No stock to hold or deliver AND no money to collect! 5. Ultimate consumables - everyone uses gas, electric, phone, broadband, mobiles etc - I just show them how to pay a lot less! 6. Unlike many other MLMs and Direct Selling companies, I never have to worry about going back to my customers each and every month looking for repeat sales...they just tend to keep using their Energy, telephony and broadband without me ever having to remind them! 7. Leverage your own time by doing the work once and getting paid every month thereafter. 8. Leverage other people's time by earning a small commission on all your team members customers as well. 9. And, when you do get to retirement, the residual income that you have built up (and that your team are continuing to build up in their businesses), means your monthly commission cheque will continue to rise - rather than have to retire on a pension which only gives you about a third of what you could barely get by on when you were working! 10. Your business is also a saleable and willable asset which you can pass on your residual income as a lasting legacy to your loved ones when you die. In order to comply with lovemoney's T&C's I can't leave any links to my website, but for anyone who really wants to find me or explore things further I'm afraid you'll just have to search for me. Martin Louden
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Well, I'd say the worst way to make money is to stick it in a savings account. I've had an average for the year of approx £120k from the sale of a house, spread across several savings accounts, and in the last financial year Apr 09 to Mar 10 it earned £676.23 before tax. That's the whole amount, for the whole year, across all accounts. Given today's inflation figures, that's pretty depressing.
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Get back to basics, we all probably eat too much and are used to 'luxury' foodstuffs that my parents would never have had. Make your own food instead of ready made cardboard food. Consume fewer Chinese goods that we don't need but 'desire' when paraded in front of us. Use Freecycle etc to avoid throwing stuff in the tip and save others money. In fact it is the WW2 over again only this time the enemy are the bankers that have bankrupted out country and incurred the massive 'deficit' that Cameron wants to get rid of before the next election. Then labour can get back and run it up again. How rubbish are our politicians.
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20 February 2011