Journal is powered by Vocal.
Vocal is a platform that provides storytelling tools and engaged communities for writers, musicians, filmmakers, podcasters, and other creators to get discovered and fund their creativity.
How does Vocal work?
Creators share their stories on Vocal’s communities. In return, creators earn money when they are tipped and when their stories are read.
How do I join Vocal?
Vocal welcomes creators of all shapes and sizes. Join for free and start creating.
To learn more about Vocal, visit our resources.Show less
When I was in high school, I took a consumer finance class. I have always been inclined to be business minded and I remember being very excited about the class when I registered. It only took me a few weeks to realize I was going to be sorely disappointed. One moment that accurately describes the entirety of the class was when the teacher shared an anecdote of a woman who she claimed was “the best investor she knew.”
Apparently, there was this woman who worked as a waitress her whole life. From the time she was 20 until she retired at 65 she worked at the same restaurant. She never had extra money but she got by alright every month. On the day she retired from the restaurant she came in to say her goodbyes in a brand new Mercedes (she had previously driven an old Toyota), and soon someone saw that she had moved to a million dollar beach house in Florida. Everyone was astonished at how this career waitress had suddenly become so seemingly rich. It was at this point that our teacher gave us the inside scoop and revealed that this waitress had been squirreling away $50-100 out of her paycheck every week and putting it in a low-interest retirement account, thus making her a millionaire at 65.
It was obvious that our teacher expected this to impress and inspire us, but I was about 16 at the time and I honestly wasn't thinking about what my life was going to be like at 30, much less 65. However, this attitude of “investing is for retirement” is one that I have encountered countless times when seeking investing advice. I cannot tell you how many times I've heard “put 2,000 dollars in a Roth IRA and you'll be a millionaire when you retire.” Not once did someone think to teach me about stocks and bonds, or the difference between a mutual fund and an ETF. I wanted to learn how to invest in ways that would put my money to use now and see returns in the near future, but no one wanted to teach me.
So that's what I'm going to do today, the following is a list of my favorite ways to invest that will see good returns in under two years:
The Stock Market
Stocks are perhaps the most common tool used for short-term investing. And this is for good reason as they can be used for many different purposes and have many different investment strategies. The two main type of stocks I buy are Dividend stocks and Growth stocks. However, as this list is about short-term investments only, I will only be talking about the latter. A growth stock is a stock purchased in the hope that the stock price, or the value of the stock, will increase significantly in the near future. With these type of stocks, the key to maximizing profits is volume. If you own 100 shares of a stock and the price rises from $49 to $51, then you have just made $200. Likewise, If you owned 1,000 shares of the same stock you would make $2,000, and so on. Unfortunately, most of us cannot afford to buy 1,000 or even 100 shares of a $49 stock as it would cost us $4,900-49,000. But imagine a stock that was priced at $1 and rose to $3. If you owned 1,000 shares of this stock you could make the same $2,000 profit for much less upfront cost. This is why penny stocks are so popular. However, penny stocks are incredibly volatile and extremely risky and I would not recommend them to most people. I have found that my sweet spot for profitability is investing in stocks that are in the $4 - 10 range. This allows for the semi-low upfront cost without extreme risks.
Exchange traded funds (or ETF’s) are similar to stocks but different in a number of ways. ETF’s are actually quite simple but you would never know based on the amount of extremely confusing definitions on the internet. Basically, an ETF is an investment in a specific market. Someone, don't ask me who because I don't actually know, basically creates a portfolio of stocks where all the stocks come from the same business sector. When you buy a share of an ETF you are essentially buying into all of the stocks in its portfolio, these stocks are called the ETF’s holdings. For example, one popular form of ETF is the iShares ETF which focuses on tech-related companies such as Samsung or Apple. Depending on the sector, and ETF may have hundreds to even thousands of holdings. This is advantageous because your money is not tied up in one stock but spread out over thousands creating instant diversification. The only catch is that because they are so spread out this means they are usually fairly stable which means that they are unlikely to see a huge spike in either direction, making it hard to earn a substantial profit in the short term. However, my favorite thing about ETF’s and the reason they are on this list is that there are constantly new ETF’s being created in new and creative fields. If you do your research, you can get in on a new ETF before everyone else catches on and potentially earn a good profit.
Another of the most popular forms of investing, or at least one of the most spoken about, real estate investing can be tricky and the market is flooded with people preying on would-be investors. However, I have found that an investor can make good money relatively quickly through real estate. There are a few common forms of real estate investments such as Wholesale, Buy and Hold, and Fix and Flip. Buy and Hold & Fix and Flip are exactly what they sound like. You either buy a house and hold it for a period of time until you can sell it at a higher price, or you buy a house and do improvements on it and then sell it at a higher price (as seen on every HGTV show ever). However, fix and flip requires a lot of work and buy and hold can sometimes take years. So I will mainly focus on Wholesaling. A Wholesale deal typically works like this: the wholesaler makes a contract with the seller of the home for a specific price (let's say $100,000). They then market the home to potential buyers at a slightly higher price (let's say $110,000). If someone buys the house during the contract period, the wholesaler pockets the profits (in this case $10,000). The benefit of wholesaling is that it is all done on contract. The wholesaler never has to put up any cash and never has to own the house. The profits can be huge. However, there is quite a lot of work that usually goes into a Wholesale deal as you much thoroughly research the house and marketing can be expensive if you don't already have a buyer lined up. But if you do your research and stay smart, a Wholesale Real estate deal can be incredibly profitable in an incredibly short amount of time.
Technically, tax liens fall under the category of real estate investments. However, they are significantly less well know, than strategies like wholesaling and house flipping. Every piece of property in America has a property tax attached to it. If a property owner does not pay this tax, the government to whom the tax is owed (almost always the city or county government) can place a tax lien on the property. A tax lien is a claim on that piece of property which essentially requires the property owner to pay the amount of the tax plus interest within a certain time frame. If the property owner does not pay off their tax lien then the government can foreclose on their property. A county government may have hundreds of tax liens in any given month totaling thousands of dollars. So in order to get that money as fast as possible, the county will hold a Tax Sale where they sell off all the tax liens at auction (sold to the highest bidder). This is where you come in. As a tax lien investor, you attend these auctions and buy these liens. Now the property owner owes the money to you instead of the government. What's even better is that if they fail to pay their tax lien (the amount you paid at auction plus interest) you can now foreclose on their property. The appeal of tax liens for investors is that there is little to no risk involved. Either the property owner pays you what they owe you and you make a profit off of the interest, or they don't pay you and you foreclose on a property which you can then sell at a ridiculously large profit. What I like about tax lien investing is that about 50 percent of the liens sold at any auction I've ever been to are under $1,000 with some even being only a couple hundred. Also, the interest rate is usually way higher than that of any loan and the redemption period is always under two years (interest rates and redemption periods vary from state to state).
Forex, or the foreign exchange market, is perhaps teh investment on this list with the quickest returns. It is also the most complicated. Basically, this is a market where you can essentially gamble on wether you think the value of a certain currency will increase or decrease. It bears similarities to day trading on the stock market with a few exceptions. Since the forex market spans so many time different countries and time zones, there is no central trade hub and trading is open 24 hours a day. As with stocks in the stock market, you as the investor are simply betting on how well you think a certain currency is going to perform in the future. For instance, if you are an American who believes that India is the next upcoming economic superpower, you may trade a certain amount of US dollar for a certain amount of Rupees in hopes that you will one day be able to trade those Rupies back for more US dollars than you paid for them. The forex market is by far the largest market in the world and the sheer volume combined with the whole open 24 hours thing makes it extremely fast-paced. This can be both an advantage and a disadvantage. It is good because it allows you to turn a profit very quickly so that you can then reinvest and build up your capital in a way that would be near impossible on any other market. It can be dangerous because the forex market is far more complicated than other markets and has a very specific set of terms and jargon that can be confusing. Therefore if you make a mistake or get a bad deal, you have much less time to rectify the situation before it's too late. This being said, if you put in the necessary work and take the time to educate yourself it is more than possible to make a nice profit in a very short amount of time.
These are some of my favorite and most used methods of traditional investing because they are quick, easy, and relatively Real estate risk, if you know what you are doing. However, I would not recommend that anyone try to invest in any of these things simply after reading this article, at least not without prior knowledge or guidance. The key to good and profitable investing is to know what you are doing before you do it. You don't want to spend money on an investment and then find out there was something you didn't do or another hidden cost you were unaware of. DO YOUR RESEARCH! I would recommend spending at least five to six hours of the investment method of your choice before doing your first deal. The internet is full of free information. As always, you can send me a message if you have any questions or would like me to point you to any education/resources. Good luck