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Can I Backdate My Paycheck?

The backdating of stock options has been a big news item in recent months, with a slew of companies reportedly being investigated for a practice that essentially works as a financial time-travel machine: Come with us now, the option grant letter might as well read, back to those halcyon days of yore when our company's triple-digit share price was a mere 10 bucks. A risk-free stock profit awaits!

As the Beach Boys once sang, wouldn't it be nice? Alas, most of us haven't been awarded options, and so a simple question emerges: Can I backdate my paycheck?

The answer my friend
It would indeed be nice to cash your current paycheck and spend it at yesterday's prices: Just think of the money you'd save on fuel costs and health insurance alone. That's not possible, of course, but there are simple steps you can take to perform that trick in reverse. If you put your money to work now, after all, your future self can reap the benefits of "backdating" without that icky unethical feeling. Nice, no? Here's how to get it done.

1. Go auto
My hunch is that, if you're reading this, you're already directly depositing your paycheck. If not, sign up for that service now: When it comes to making the most of your money, out of sight can be blissfully out of mind. In the same vein, after you've set your checking account to automatic, begin setting aside regular sums in a short-term savings account until you have enough to cover at least six months of living expenses.

Be sure, though, to make that money work for a living. Inquire about the interest-paying vehicles your bank offers, but remember: You have plenty of options. Indeed, in the September issue of the Motley Fool Green Light service, my pal Dayana Yochim profiled three smart ways to "give your savings a boost."

The upshot? There is, as Dayana puts it, a hidden fortune inside your paycheck, and you shouldn't settle for paltry returns on your short-term cash. Even some brokerages, after all, are offering rates in the neighborhood of 5%. And speaking of brokerages ...

2. Get linked in
No, I'm not talking about the popular networking site. Rather, once you've set yourself up with a plush place for your savings, link your account to a low-cost brokerage house as well. A return of 5% is decent enough for savings, but if you really want to make your current dollars grow, you'll want to invest 'em: The market's historical rate of return is more than twice that figure -- 10.5% to be exact.

We, of course, think you can do even better than that, and Motley Fool Green Light has you covered there, too. We've zeroed in on go-go growth stocks trading at fire-sale prices, for example, and we've also uncovered rock-solid nest egg protectors as well. (Click here to check out those features -- and the entire Motley Fool Green Light service -- for free.)

What's more, while the market is always moving, there are always bargains to be had. Currently, you can snag the likes of Citigroup (NYSE: C  ) , Wal-Mart (NYSE: WMT  ) , and Lowe's (NYSE: LOW  ) -- each of which has delivered an annualized return in excess of 15% for the 10 years that ended with January -- at price-to-earnings ratios lower than the S&P 500's. Weatherford International (NYSE: WFT  ) and Caterpillar (NYSE: CAT  ) sport similarly juicy profiles -- and prices well below their respective 52-week highs to boot. That's also true of long-haul overachievers Sallie Mae (NYSE: SLM  ) and DR Horton (NYSE: DHI  ) .

What's more, if you're looking for a no-muss, no-fuss solution, top-drawer mutual funds are just about the ideal vehicle -- particularly since your brokerage should offer a heaping helping of them on a no-transaction fee (NTF) basis. If a fund appears on your broker's NTF list, you can plunk down money as often as you like without paying a single penny in commissions -- a great way to put your money to work early and often.

The Foolish bottom line
If you'd like some action-oriented assistance when it comes to making the most of what you're making, consider giving Motley Fool Green Light a risk-free spin. Click here to snag a free 30-day guest pass and explore the service, which comes complete with a monthly newsletter, advisor blogs, and get-it-done work sheets that can help you spring into action ASAP. Our members-only discussion boards also come gratis, so there's nothing to lose -- and a much more profitable paycheck to gain.

Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service and co-advises Motley Fool Green Light with his pal Dayana Yochim. At the time of publication, he didn't own any of the securities mentioned above. Wal-Mart is an Inside Value recommendation. You can check out the Fool's strict disclosure policy by clicking right here.

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5/27/2016 4:03 PM
C $46.58 Up +0.47 +0.00%
Citigroup Inc CAPS Rating: ***
CAT $71.96 Down -0.12 +0.00%
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DHI $30.58 Down -0.01 +0.00%
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LOW $80.35 Up +0.19 +0.00%
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SLM $6.74 Up +0.04 +0.00%
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