Where do I invest $500 – $4,000 for x-amount of time

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April 24th, 2006

Many folks will tell you there’s nothing you can do with this amount investment wise, I disagree.

Short Term – Use eBay to Make Money
The internet provides many opportunities for profit on relatively small amounts of money. Websites that provide good deals on merchandise (like FatWallet.com) combined with an auction site like eBay, or a classifieds site like craigslist can create arbitrage opportunities.

The trick in this strategy is in finding a good deal, and timing your listing. As an example, let’s say the Dell offers the following deal on a flat screen monitor: it normally sells for $319, but with the right application of coupons and limited-time offers, you can get it for $249 with free shipping.

Once you receive your new monitor, list it on eBay. You can set your opening bid at $250, so no matter what, you profit. Let’s say that the final bidder knows he can get the monitor from Dell for $319, and the shipping cost is the same from you as from Dell. So, he bids $300 and wins. You have just made $50 on your initial $249 is your spare time.

The downside to this strategy is that it takes time. You will need to be involved in every step in this deal. However, since the formula can be repeated many times over in a year’s time, you stand to profit very well if you are diligent about finding deals.

Medium Term – Open bank accounts for the rewards
The idea here is not necessarily new, but it is exciting. Basically you use your on-hand cash to open new checking/savings accounts where sign-up bonuses are offered. For example, Bank of America in the past has offered $50 for depositing $150 and maintaining that balance for 90 days. After 3 months, you now have $200, a 33% profit.

The downside of this strategy is that you need to be diligent in keeping track of your investments. The best idea is to create an excel spreadsheet listing the institution, the bonus amount, the deposit amount, any special conditions (some places require you to use their bill pay services, etc.), and the “maturity date” of your investment.

Long Term – Invest in the Stock Market
Many will say that investment is too risky, but over a long-term, most risk in the stock market is mitigated, and you stand to make a good annual return on your money. To minimize your risk, consider buying an index fund or spider (such as the SPX).

The S&P 500 has averaged approximately 10% growth for the past 30 years. Leaving your $500 in the market for 5 years at 10% APR will give you around $300 back on your investment (60% profit). Trading stocks will kill your profit. At this level of investment, even $10 per trade means you are spending 4% of your money every time you buy and sell.

The best part is that you don’t need to do anything but check once a month to see how your investment did. This strategy requires no effort from you at all, except to open a trading account and make the purchase.

Entry Filed under: Financial Investments
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