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I have $5.

What do I need to do to invest and grow it?

That’s a question I came across on Reddit and Quora, and it’s not as stupid as it sounds.

It reminded me of the book I read called What I wish I knew when I was 20 which provided examples of what a Standford entrepreneurship class did to turn the $5 they received into $650.

Here’s the original question from Reddit.

I have $5. What is the best way to invest and grow my money? A friend asked me.

Because the question specifically mentions “invest” and “grow my money”, I’m not going to throw out canned responses like buy a lotto ticket.

The important thing I learned from the book was not to box yourself in when thinking about solutions. Instead of focusing on the $5 limitation and coming up with a lemonade stand idea that everyone is thinking, clearly identify the end goal you want to achieve and work backwards to identify the scenarios you can come up with.

10 Simple Ways to Invest and Grow $5

5-dollar-challenge

1. Focus on accumulating knowledge. There are lots of free investing ebooks so start with as much of those as possible. (FREE)

2. Go to the library and read all the investing books you can. ($5 transport fee?)

3. Read Warren Buffett’s Berkshire Hathaway annual letters from his website. Same goes for Howard Mark’s memos. (FREE)

4. Reach out to somebody who is good at investing and growing money and offer to buy coffee. Soak up as much knowledge as possible. ($5)

5. Wait until Apple releases a new product and pay somebody to stand in line for $5. Then as the line gets longer, sell the spot for $50. If you have $50 to start with, that would make it even faster. ($5)

6. If you are a college student and have the opportunity to host a presentation or talk on any topic, sell the opportunity to a company whose main target audience are college students. Charge $500 or charge a certain amount per person in the audience. Say that you charge based on cost per acquisition. (FREE)

7. Spend $5 to buy or borrow a bike pressure checker and pump. Set up a table near a road where there are lots of cyclists and offer to check tire pressure for a donation. ($5)

8. Go to a nearby mall where there are lots of small family businesses. Give away 10 ideas to each business on how to improve their business. If even one idea is implemented by the business owner, you’ve gained immediate credibility and trust and a long term potential business partner. (FREE)

9. Find an event of tradeshow for an industry you know a lot about and apply the same technique from no.8. Provide real and valuable feedback on the products people are selling. ($5 or $7 entry fee)

10. Find a person needing help with photo, image editing, voice overs or creating and editing simple videos. You can also post a simple gig on Craigslist offering these services without knowing how to do any of it yourself. Charge an amount based on the amount of work required. Go to fiverr.com and then pay somebody $5 to complete the work for you. ($5)

In the Investing World…

See how simple and effective a lot of these ideas are?

In the business world, there are truckloads of companies who are being uprooted by newer companies simply because they refuse to change or adapt to a new economy. Entire music albumns don’t sell well because people now buy singles for $1.

Nobody takes their broken computers to a repairman and spends $200 to fix an old computer when you can buy a new one for $400.

Boiling it down, to avoid value traps, think about what moat or competitive advantage the business has.

There are many businesses that can be started based on those 10 ideas. That’s how easy it is to set up a business nowadays and go from zero to profitability in a day. Something most companies can never do.

A daily practice you can try is to think of different ways a new product or service could disrupt your current holdings.

If you’ve never done this before, it’s really difficult to come up a wide variety of ideas. But ultimately, your ability to foresee and understand the moat of a company will increase exponentially and your investing acumen will increase a long with it.

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