How & Where to Invest Small amount of Money?
Recently a regular reader of this Blog Jal Desai now a Friend has asked me the following question.
“Hi Asav.
You know that I am an avid reader of your blog and consider this blog as the first option to get ANY finance related information. I just have a request that can you write an article on how one should start investing in what all sector IF ONE HAS ONLY RS.5000 in hand currently. You must have guessed right. I only have 5000 Rs. in hand which keeps on decreasing as time goes and I want to invest optimally to gain better results. I am sure many people must be facing a similar situation. May be an article could help. Thanks..”
Jal himself is a Blogger of a Technology Blog – TechExplorer.in
In fact, I am also a regular reader of Tech Explorer. Anyway, Today let us discuss about where to Invest your Money if you have just Rs.5000 in your pocket. All of you now know that, keeping money with you can be disastrous over the time because governments & Central Banks all around the world are printing Billions and Trillions of dollars daily and pushing it into the economy which is diluting the purchasing power of your existing money on the hand.
Recently, the US Government has printed US $ 1.2 Trillion and pushed it into the economy and the world is now worry about the consequences of Fed’s this step. The main concern is “Risk of Hyperinflation.”
So Saving money and keeping it with you can really erode the value of your money over the time. The Asset is more valuable than Money. Because the Asset appreciates in its value and price both over the time while money is something which will loose its purchasing power over the time. So if you have money than acquire Assets out of your money rather than saving it.
So the wise thing is to exchange your Money with Assets. Because Assets will maintain your purchasing power. You can buy any assets out of your money such as stocks, bonds, gold, real estate, mutual funds, art, intellectual properties, paintings, old stamps, rare wines, antiques, rare coins, web properties or anything else……!!!!!
But here The question is not about weather to Invest or Not? The question here is that, What to do if you have only Rs.5000 in your pocket? Because, when you have just 5000 in your pocket than you can’t buy just 2 Reliance or 3 Infosys shares out of it and keep it for longer time. Because Bluechips are grown to such a large extent that they can’t appreciate much more than their current levels.
And suppose if you go with some Financial advisor than, I am sure that he/she will advise you to invest in Gold, Mutual Funds, Savings Schemes or Small Stocks. Well, of course, investing in these is a wise thing. After Gold is the real money and investing in Gold and other assets can really protect the purchasing power of your money. But the thing is that, we have just Rs.5000 in our pocket. So where to Invest?
After a lots of mind work, I have create the following Investment Plan for Jal and everyone else who have as little as just Rs.500-1000 in their pocket but still can Invest in the following things -
I will be happy if you follow the following Investment List in Chronological order. Means the first priority should be to first thing and after that, if you have any money remaining than go for the next thing. So Here we Go…..!!!!!!!!!!!!
[NB – This List will be useful to you when you have small amount of money in your pocket and want to invest. Of course, if you have Big Bucks than you can go for possibly any Investment Vehicle…]
01) Invest in your own Financial Knowledge -
Well, This should be the first Investment if you have very few bugs in your pocket and still want to invest. Honestly speaking, When I had just Rs.500 in my pocket for Investment 3 years back (2006), I had invested those Rs.500 in my own Financial Knowledge. I bought a Personal Finance Book, “Rich Dad Poor Dad” for Rs.285. And that single book has changed my life. After that I had periodically invested more and more small amount of money behind buying Personal Finance, Investing, Business & Entrepreneurship Books.
Remember, Investment in your own Financial Knowledge will pay you the Best Dividends in the long run.
Now, not the all the people are active readers like me. Than what to do? Well, there are not the Books available in the market. There are lots more things that available in the market which are fun and can increase your Financial Knowledge such as Audios, Videos, CDs, Programmes (Real Estate Investing, Stock Market Investing,…etc..) and Games. Amazon.com is the Best place to buy such things.
After a year, I had a Great Collection of Books that are really useful to increase your Financial Knowledge. Here is the List of Books that I currently own. This Collection of Book is my Portfolio. It’s the Investment in my own Financial Knowledge which will give me Best Returns for the rest of my life.
01) Rich Dad Poor Dad – Robert T. Kiyosaki
02) Cashflow Quadrant – Robert Kiyosaki
03) Guide to Investing – Robert Kiyosaki
04) The Intelligent Investor by Benjamin Graham
05) The Millionaire Next Door
06) The Richest Man in Babylon
07) Dhiruism
08) Made in America (The story of Wall Mart)
09) It Happened in India (The story of Kishore Biyani & Big Bazaar)
10) Total Money Makeover – Dave Ramsey
11) Bill Gates – Business at Speed of thought
12) Business Maharajas – The story of Birlas, Tatas & Ambanis
13) Securities Analysis by Benjamin Graham
14) Why we want you to be Rich – Robert Kiyosaki & Donald Trump
The Total Value of the above Portfolio is of around Rs.7000. But its worth it. Of course, I can’t sell these books in future for Rs.70,000 like Stocks & Mutual funds but the Information inside all the books is very much useful to me and literally millions of people. And many Pillar posts of this Blog are the end products of these great books.
02) My Second Investment – Financial Games -
After investing Rs.7000 behind developing a great Information Rich collection of Books, I moved towards my second Investment, Financial Games. If you want to learn the real game of Investment, first of all you should learn all the rules of that game. And the Best way to learn is by playing Games.
Cashflow 101 Game by Robert Kiyosaki, The author of the book “Rich Dad Poor Dad” was my second Investment. The game was around Rs.13,000. And I had only Rs.3000 to invest so what I did? I find out 3 more partners who have invested the rest of the money and we told one of our friend in USA to bring that game for us in Dec.2007.
Of course, you can download the Computer Version of the game online but Playing a Board Game is a different thing. Me and my friends learned lots of Real Estate Investing strategies from Cashflow 101 Game.
03) Invest in your own Business -
The third investment should be – Invest in your own Business. Yes, When you have less money in your pocket, it is advisable to invest in your own Business first because it will appreciate much faster than investing in some one else’s Business say for example buying stocks of Reliance.
Let me give you my Example. When I had Rs.3000 on Hand Cash, I invested that money in my own Business – This Blog. I first of all, shifted this Blog on Private Domain that cost me just US $ 10 (Rs.500). And with the rest of Rs.2500, I had given that money to one SEO writer and he wrote 20 search engine friendly articles for my this blog related to Money & Finance.
And today my that Investment has proved. Because those 20 SEO articles are bringing much more organic (Google) traffic to this Blog than any other articles of this Blog. And more traffic means more Revenue (Income) from this Blog. Within 6 months of my Rs.2500 investment in SEO writing, I have get back more than 40% of my originally invested money back from those 20 articles only.
I had invested those Rs.2500 behind developing the Assets of my own Internet Business – The Blog Archives. The Best thing about this Investment is that, once I will get my invested money in a year or so, those SEO friendly articles will still continue to generate steady Income for me.
You can invest your small amount of money behind developing your own Business (If you have any). You can spend those money behind a good website template or you can hire SEO writers for you or you can simply run a Google AdWords Campaign.
04) Invest in Domain Names -
Another great Investment Opportunity is that, you simply invest in Domain names. Simply go to GoDaddy.com and buy few Domain names in your account. The Domain Names will cost you just US $ 10 per year.
Domain Names are the Assets. They are the Real Estates of the Internet. The Domain Name Loan.com sold for whooping US $ 3 Million. When I had Rs.5000 on hand, I had bought following Domain names just few months back and here is my Domain Names Portfolio.
- eFlippa.com
- iFlippa.com
- BusinessFlippa.com
- DomainFlippa.com
- WebsiteFlippa.com
- eBusinessFlipper.com
- Investta.com
I will hold these Domain Names for next few years and than I will sell them on Sitepoint.com, eBay.com, Sedo.com or Flippa.com
I am not saying that the above Domain Names will be worth of Millions in next few years. But they will surely fetch 300-1000% returns in just next 2-3 years for me. So my original Investment behind these Domain Names will be at least 3-10 Times.
Right now I have invested US $ 70 (Rs.3500) behind these Domain names. Suppose I hold these Domain Names for 3 more years so I will have to invest more US $ 140 (US$ 70 per year for another 2 years) to hold these Domain Names. So my Total Investment will be US $ 210 or Rs. 10,500.
And I am sure that I will sell these Domain names after 3 years for more than US $ 700 (Rs.35,000) may be much more than this….!!!!!
So which Investment in this world can give you this much return?
So This is what all I think about Investment with small amount of Money. If you don’t find it comfortable than you can go for traditional Assets also. But they won’t give you much returns.
[IMPORTANT: Please Please Invest your Money otherwise you will be in great trouble. If you don’t know anything about investments and still want to invest few thousand bugs than simply spot some artist and tell him to draw any kind of sketch for you. You take that Sketch in exchange of Money. But Don’t keep money with you. Because that Sketch is an Asset. Whenever you will sell that sketch in future on eBay, you will definitely make a profit but that Money will not grow automatically.
I am from Ahmedabad City and what one of my Friend do is – There is a Shopping Mall in Ahmedabad where one Artist sits. He makes A4 size sketches for Rs.200-1000 per Sketch. People don’t spend much behind such kind of things. But my Intelligent friend has bought more than 50 Sketches (Worth of Rs.20-40K) from him because he strongly believes that these Sketches are Assets and thus they are more valuable than Money so instead of keeping money with him, why don’t keep Assets (Sketches) with him?
In short, if you can’t find any Investment Vehicle, simply pick some artist, give him Money & buy Sketches or other artistic work from him.]
Hope This much Information will be helpful to you….!!!!!
