Ideas to invest small amounts of money in

[Silvestru]

Hello,

This is just an open discussion, I have some money (5K$) aside (I know it's not much but I'm 27 so it's a miracle that I even saved that) and I am curious what would you guys invest in or do to maybe increase it. I am not a fan of stock exchange so maybe nothing in that direction. (e-currency is also in that category)

I want to do something productive but I have 0 inspiration. Feel free to share ideas on this topic even if they don't apply to me.

[ALine]

Ok so you have "X" amount of currency right now and you are trying to obtain "X+n" amount of currency. So one of the main principles that would allow for anyone to turn a little bit of money into a lot a bit or money is the "Short-term pain, long-term pleasure" aspect. If you saved up that amount of money by yourself then CONGRATULATIONS!! You have most likely passed the Short-term pain part and are now starting to go into the long-term pleasures section of your life. You have successfully passed a majority of Americans who want to be free of financial worry in the future. The next step is to try and plan on, as I have mentioned before, how to make more money. So you can go a few options with this. You can invest in stocks and bonds, start a business, or simply save the money and let the 1.x% bank thing increase the value of the amount of money that you are in. What I suggest doing it sitting down in a room by yourself without any distractions and basically planning out your entire future. What passions do you have, what is someone thing that you can do to obtain resources in order to turn this hobby into a full-time career. You could use some of the money to obtain online courses, good and cheap ones, in order to learn how to perform a specific skill. If you do not know it yet then I would suggest learning how to program and then create something new like an invention or something.

 

What having money basically means is that you now have access to 3 key aspects of our society; Social Status, Knowledge Resources, Material Resources. Anyone of these 3 things can get you more money, you just need to come up with a creative solution of on how to make more money.

[Silvestru]

Haha you flatter ALine, I did not mention that i live in rent so it's not exactly free of financial worry. Actually this worry is what makes me ponder. 

The rest of your post was very insightful. My problem is that I'm really hesitant to make bank loans to buy an apartment for example. I know it's a bad way of thinking as usually you end up paying rent as much as you would pay the bank for your own apartment but still, bank phobia is what I live with.

To give you examples of other freaks like me, I am working in a corporation and I have a colleague who got sick of paying almost half his pay for rent (he earns a very respectable salary BTW) so he bought a Mercedes Sprinter 2014 and turned it into a house. He lives there and parks next to our job. He even has WIFI from it and does all the hygiene stuff at work.(corporation) It's a very hippie style  but he basically pays nothing for rent. (I wont discuss the impracticality, legality or sheer wtf factor of this choice haha).

If your only goal is to save money then he is winning haha. I like "stuff" too much so I could not do that.

 

Edited July 25, 2018 by Silvestru

[nevim]

I was fortunate enough to have £50,000 a couple of years ago. I was living in Prague so I rented one nice apartment for me and another that I sublet through Airbnb.

Something I considered was buying and then selling stuff (probably clothing) on EBay or Amazon but I never got round to it.

Other than that, you could keep it safe and hopefully/maybe get occasional payouts from it by turning it into premium bonds.

[Silvestru]

16 minutes ago, nevim said:

I was fortunate enough to have £50,000 a couple of years ago. I was living in Prague so I rented one nice apartment for me and another that I sublet through Airbnb.

Something I considered was buying and then selling stuff (probably clothing) on EBay or Amazon but I never got round to it.

Other than that, you could keep it safe and hopefully/maybe get occasional payouts from it by turning it into premium bonds.

Those are some big investments. I was thinking about smaller scales. And clothing takes a lot of time. I am searching for a one time investment kind of thing.

[iNow]

7 hours ago, Silvestru said:

I am curious what would you guys invest in or do to maybe increase it.

It is important to clarify first: When do you anticipate wanting to take the money out? Is this money you might need access to next month, or is it something you want to put away and forget about for a few decades? That helps focus your options.

6 hours ago, ALine said:

or simply save the money and let the 1.x% bank thing increase the value of the amount of money that you are in

Unfortunately, this suggestion will result in a net loss. While saving is always good advice, the approach presented here doesn't account for inflation. If the savings account grows at 1.x% with current inflation closer to 3%, this will slowly eat away at and evaporate his dollars.

It's a little bit like choosing to store your water in a container that's leaking slightly faster than new water is being put in. Yes, storing water is a hugely important idea, and SO much better than not storing water at all, but if you're losing water faster than you're gaining it then you should consider alternative storage containers that fill faster than they leak.

Similar with money, and this is why timeframe when the money needed is so critical. If he needs the money soon, then it's okay to lose a few percentages of that money to inflation. If he can ignore the money for years, then there are better options that will allow it to grow at a pace exceeding inflation.

[Silvestru]

7 minutes ago, iNow said:

It is important to clarify first: When do you anticipate wanting to take the money out? Is this money you might need access to next month, or is it something you want to put away and forget about for a few decades? That helps focus your options.

Unfortunately, this suggestion will result in a net loss. While saving is always good advice, the approach presented here doesn't account for inflation. If the savings account grows at 1.x% with current inflation closer to 3%, this will slowly eat away at and evaporate his dollars.

It's a little bit like choosing to store your water in a container that's leaking slightly faster than new water is being put in. Yes, storing water is a hugely important idea, and SO much better than not storing water at all, but if you're losing water faster than you're gaining it then you should consider alternative storage containers that fill faster than they leak.

Similar with money, and this is why timeframe when the money needed is so critical. If he needs the money soon, then it's okay to lose a few percentages of that money to inflation. If he can ignore the money for years, then there are better options that will allow it to grow at a pace exceeding inflation.

Thank you for your answer. This is money that you don't necessarily need. Exactly to the point that you said, it feels stagnant to just save and leave it in a piggyback. This is money that is floating and even total loss due to a risky investment would not affect the survival of the individual. Although it would cause tears to shed. 

[iNow]

24 minutes ago, Silvestru said:

This is money that you don't necessarily need. Exactly to the point that you said, it feels stagnant to just save and leave it in a piggyback. This is money that is floating and even total loss due to a risky investment would not affect the survival of the individual

The next question is what do YOU want to do with it? What is important to YOU?

Do you want to share it and donate it to help others in a philanthropic way? Do you want to purchase an experience or a vacation, basically to exchange the money for experiences and good memories? Do you need to cash it in for a material good you'll use everyday (new shoes, new car, new teeth...)? Do you want to share it with your future self to make that future self more secure and comfortable?

If the last one (share with your future self to better enable financial comfort and stability), then it's hard to beat a low-cost index fund that tracks to the market itself. 

To do that you can use an IRA, or (if you think your future self will be earning higher income and be taxed at a higher rate), you can use a Roth IRA as the vehicle to track that index fund investment and maximize tax savings.

Edited July 25, 2018 by iNow

[ALine]

Your best bet is to sit down and plan out EVERYTHING with a central desire or goal. Like what is your end game in terms of where exactly you want to live and what exactly you want to be doing for the rest of your life. Then start using that as an end goal and start working your way up to that.

[Alex_Krycek]

If you're looking for long term, conservative investing with low risk, and you live in the United States, you should seriously consider index investing.  Google "Mr. Money Mustache" for more details.  Yes, I know, his name sounds goofy.  But the guy wrote a pretty solid book and retired in his mid 30s based on his strategies of long term, low risk investing.  The key isn't wild, speculative venture capitalism, but rather simple mathematics and something called "compounding".  Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. But keep in mind that this approach requires you to have a steady income that you can consistently invest in your chosen index. 

Anyway, check it out. 

[Ten oz]

5 hours ago, Silvestru said:

Thank you for your answer. This is money that you don't necessarily need. Exactly to the point that you said, it feels stagnant to just save and leave it in a piggyback. This is money that is floating and even total loss due to a risky investment would not affect the survival of the individual. Although it would cause tears to shed. 

I agree with the direction iNow is leading you. It is your money and you need to consider your own liabilities (short term reasons you might need $) and what you are hoping to get in return for the potential risks that investment comes with. It is good advice. 

My advice is a little different. It doesn't seem like you know what to do or are educated about how to do it if you did. Last thing you want to do is lose your money or get in over your head with things you cannot handle. I recommend putting the money in Certified Deposits (CDs) for now. Perhaps a single year one and a longer term one. The single year one will ensure you'll have access to some money within a year and the interest rates on the CDs should keep your money from shrink against inflation. Doing this won't make you much money but CDs are safe and will give you time to consider other options while scratching your itch to do something with the money. I personally use to buy CDs regularly. A few times I even secured low to no interest loans against them when I needed to make big purchases. In those cases I was like spending the money in the CDs in a way that forced me to pay myself back. 

There are many more profitable things you could do with your money but nearly all of the more profitable options come with far more risk. Each invest type also comes with its own learning curve. 

[Sensei]

7 hours ago, iNow said:

then it's hard to beat a low-cost index fund that tracks to the market itself. 

...only if you will put money in them when markets are at the bottom...

Good moment to follow your advice, in the majority of western countries (except Greece and Cyprus), was the beginning of 2009 year..

Looking at Polish stockmarket charts: increase of the main index +62% from Feb'2009 to Jul'2018. From $5k he would have $8100 minus 19% tax from $3k = ~$7.5k (direct investment without fund costs). $2.5k in 10 years = $250 per year. If he would give up drinking one beer per day, he would save more..

7 hours ago, iNow said:

To do that you can use an IRA, or (if you think your future self will be earning higher income and be taxed at a higher rate), you can use a Roth IRA as the vehicle to track that index fund investment and maximize tax savings.

Silvestru lives in Poland, not USA.. there is no IRA in his country.. What you're used to is irrelevant in his country (different tax brackets, different discounts etc.)

 

Edited July 25, 2018 by Sensei

[zapatos]

6 hours ago, ALine said:

Your best bet is to sit down and plan out EVERYTHING with a central desire or goal. Like what is your end game in terms of where exactly you want to live and what exactly you want to be doing for the rest of your life. Then start using that as an end goal and start working your way up to that.

I'd suggest this is the worst thing you can do. No one can plan out everything, and I've never met anyone who had the foresight to know exactly where they want to live and exactly what they want to do for the rest of their life. It's an unrealistic exercise.

Edited July 25, 2018 by zapatos

[iNow]

1 hour ago, Sensei said:

If he would give up drinking one beer per day, he would save more..

Depends on how many beers per day he consumes now and whether he’s drinking something good or drinking crap. ;-)

[Ten oz]

3 hours ago, Sensei said:

If he would give up drinking one beer per day, he would save more..

In my experience those who eventually wind up with lots of money found ways to make increasing amounts of it. Saving money is a great thing to do but in the absence of making more money has it's limitations. I never met a rich person who saved their way to wealth.  Saving money limits what one can do with money and is limited by ones income. Boosting ones income increases the limits of what can be saved while affording one the pleasure of quality beer. 

For example. I own a home and I live in it. A buddy of mine, who's wealthy, regular tells me I am an idiot for living in my own home when I could renting it out and making money on it. His advice is for me to refinance to a longer mortgage which would lower my monthly costs. Then rent my place out (market value is over triple what that lower mortgage would be) and look to buy a second home. He owns something like 9 properties. He often tells me never to make large purchases I must pay off myself. I haven't taken the advice. I find it risky but it is working well for him. 

[Silvestru]

16 hours ago, iNow said:

Do you want to share it with your future self to make that future self more secure and comfortable?

If the last one (share with your future self to better enable financial comfort and stability), then it's hard to beat a low-cost index fund that tracks to the market itself. 

Future self is all I think of . I will surely look into index funds today. Are you using them as well?

9 hours ago, Sensei said:

If he would give up drinking one beer per day, he would save more..

Haha, like Sensei mentioned and I forgot to, I live in Poland so some options here don't apply but I hope other members that live in the US can take advantage. Also it's the reason for the delay in answering.(Most of you are probably enjoying REM right now)

I am not big on alcohol but I am essentially a man-child so I do have some costly addictions related to games and sports. 

Like Sensei mentioned, Poland is on the up now so a good idea might seem to buy real estate here - a plot of land, a small apartment. Sadly, without a loan, thats way out of my reach now so hence my original post.

Anyway thanks to all, even though there have been no material profits from this thread (yet) morally and intellectually profits are flowing.

Really, before I posted, I was thinking to myself to start a herculean beetle farm haha (with no market study ofc).

[ALine]

14 hours ago, zapatos said:

I'd suggest this is the worst thing you can do. No one can plan out everything, and I've never met anyone who had the foresight to know exactly where they want to live and exactly what they want to do for the rest of their life. It's an unrealistic exercise.

I believe that starting off it would be very difficult to develop all possible occurrences and then developing a certain method of handling that situation, however one can after a while begin to make connections. One can make the argument that you need food, water, and shelter. Once you have the core components of what you need to survive then you can begin to expand from there. So you do not know exactly where you will be living in the future but you know that you need to live someone in the future. So you can start limiting the options and possibilities from being a large group to a very small group.

I also recommend that once you obtain an idea for what you want to do with your money be flexible with the idea. Do not obsess over it. Simply use it as a guideline and then continue trying to find more efficient methods for using your money wisely.

[Sensei]

Quote

Ideas to invest small amounts of money in

I would say invest in your own business. You might lose money, but at least you will gain a lot of knowledge..

e.g. you could start your own IT company. IT has one of the smallest cost of starting up required (as there is needed computer, and Internet, which you obviously already have).

At the beginning, make (or hire somebody to do it for you) templates of websites from various industries. It'll be portfolio for your own website and template for changes for specific client. Search for companies which don't have yet website (because they just started business like you, or their owners are old date, and don't understand why they should have one) and offer them your service (making website, custom program writing etc.). Learn your clients need. Maybe they will give you ideas for future programs for them, and other clients. You don't have to do everything by your self, hire graphician for making nice looking web when you will have client (the one who made templates for you). Businessmen is often middle man between people who are seeking for knowledge and people who have knowledge.

In the mean time, search for ideas for websites or smartphone apps, which do something useful or entertaining for users. There is needed flexibility and creativeness..

The most of time in IT, you will be searching for clients.

e.g. you could start your own renovation & painting company (interiors). It also has one of the smallest cost of starting up. As there are just needed employees, and advertisement (website, business cards, paper ads) and a few cheap tools. After couple done renovations you will have photo portfolio for your website for future clients. Such service is highly demanded, so problems won't be clients (they have to wait for months for a team of painters, you know what is situation in your country), but problem in this business can be employees..

 

[iNow]

8 hours ago, Silvestru said:

Are you using them as well?

Yes, and I thank Warren Buffett for the idea

https://www.cnbc.com/2018/04/24/why-an-index-fund-is-warren-buffetts-favorite-way-to-invest.html

Quote

Buffett is a proponent of index funds as a way to boost long-term investments, such as retirement savings. "Consistently buy an S&P 500 low-cost index fund," he told CNBC's On The Money. "I think it's the thing that makes the most sense practically all of the time."

"The trick is not to pick the right company," Buffett says. "The trick is to essentially buy all the big companies through the S&P 500 and to do it consistently."

 

[Sensei]

5 hours ago, iNow said:

Yes, and I thank Warren Buffett for the idea

Warren does not use his own ideas released to public audience, I am afraid so.

He is buying company, and using dividend from it, to buy stocks of other company, and then it's repeated over and over again.

...or company which BH bought, was forced to buy BH stocks, pumping its price..

...and he did not use stock split... That's why only a few people can afford buying Berkshire Hathaway stocks ($300k for each @ 2018, $7k in 1990, +4200% increase).. Stock split mechanism is often used to increase liquidity of the company (i.e. if somebody would like to quit investment quickly, there is needed high liquidity of stocks).. Lack of liquidity disallows speculations..

Think about it while drinking Coca-Cola (~10%), and clicking on iPhone (~5%). He is one of the largest shareholders.

 

[iNow]

Most normal people are not Buffett. For most normal people, low cost indexes are the obvious best choice, especially given how consistently they outperform actively managed funds and at significantly lower cost. 

[theresav fields]

Every person wants to save money for the future. So we should save money as one-third of income for dealing for future

[Silvestru]

1 hour ago, theresav fields said:

Every person wants to save money for the future. So we should save money as one-third of income for dealing for future

Sure but as iNow mentioned a few posts above, just saving the money may not be the best idea: 

Quote

While saving is always good advice, the approach presented here doesn't account for inflation. If the savings account grows at 1.x% with current inflation closer to 3%, this will slowly eat away at and evaporate his dollars.

Also, I know this is not the goal but I just want to mention that no one or very few ever got rich by slowly saving money in their office job. It's the people who take some risks that fly or fall.

[Sensei]

29 minutes ago, Silvestru said:

Also, I know this is not the goal but I just want to mention that no one or very few ever got rich by slowly saving money in their office job. It's the people who take some risks that fly or fall.

Learn programming, buy Arduino, learn how to program Arduino, make some robot which will accelerate some job.. instead of e.g. 10 pieces per minute, it will make 100 pieces per minute etc. etc. Make whole factory of such devices.. and there is worldwide business..

 

[studiot]

With that amount of money you don't want to loose any so risk is a big issue.

Are you lucky?

I know litttle of the Polish system but is there anything equivalent to UK premium Bonds?

https://www.nsandi.com/premium-bonds?dclid=CIPj4saQ_t0CFdDW3godRCUH-Q

You can't loose your money, and on average they pay out an amount equivalent to current interest rates.
 

However that is not evenly distributed so some get much large amounts (two get £1million every month)

And any return is tax free.

 

A good place to start.especially if you are a lucky person.

 

 

Are you a Dyson?

To succeed like he has done you need to be a good businessman as well as a good inventor. Most are not.

So if not, don't try it. Too many loose all that way.

 

 

Some make money by finding something valuable and selling it, for instance a lost old manuscript, painting, antique etc.

You need the interest and the right sort of 'eye' for this.

 

I know someone who makes a good profit 300% + (but in small sums) because she has a good eye for trends.

For instance she bought a collection of soft toys and kept them in tip top condition, then sold them a few years later at vast profit when they became collectable.

 

Taklksing of soft toys I have an aquaintance who was a former sales manager with British Telecom. He made more than his salary by buying soft toys and selling them at (outside) conferences and exhibitions. If you visit exhibitions you will have seen such people. It is a risk but get the right products and the rewards are good.

 

Have you ever helped with a local activity in its fundraising?

We used to run the Somerset Rural Music School 'tuck shop' which made a modest but steady and respectable break time profit.
Really good training into what sells and what does not, and how much to stock so as not to overstock.