It is always good to have some investment funds so you have the ability to execute when you see a good deal.
One of my boys bought his motorcycle with cash after he bought a Ford Ranger with a blown engine the owner could not afford to fix. He bought the truck for $500 and put in a used but working engine for $1,000. For a case of beer and some pizza, he had a few friends help him swap out the old engine with the working engine over a weekend. The following week he sold the truck for $4,500 and made a cool $3,000 for a weekend’s work.
Had he not had a small investment fund, worth less than $2,000 at the time, he would have had to pass on the deal and miss out on making $3,000 with a very limited amount of effort or risk.
In another story, a client of mine wanted to buy into a gym franchise but didn’t have the money. He looked around for a way to make a quick buck. He contacted the college where he went to school and offered to sell them spirit towels they could use as a promotional giveaway at sporting events. He then contacted a manufacturer in China and placed an order for tens of thousands of spirit towels for a small down payment. When the order arrived, he sold the lot to the college and pocketed a tidy profit, which he used to cover his franchise deposit.
The take away is that you need to have the discipline to not buy everything you want. You need to squirrel away a few dollars here and there to create a small investment fund. This will allow you to take advantage of investment deals that help you to grow your fund when they come your way.
With several investments, over time you can grow the fund to seed a small side hustle business. Then you can take advantage of the principle of cumulative advantage that states that once a business gains a small advantage over others in its industry, that advantage will compound over time into an increasingly larger advantage. The effect is well known and is embodied in the catchphrase, “The rich get richer while the poor get poorer.”
Do you have the seed money to act as leverage if you are presented with a fantastic investment opportunity?
