Turn $5K into $50,000

An in­vest­ment that grows ten­fold sounds like the an­swer to our fi­nan­cial prayers. It’s tricky if you want to do it quickly and still sleep at night but it can be done if you plan care­fully. Al­ter­na­tively, you can take your time and play it safe. Or there’

Money Magazine Australia - - CONTENTS -

If you’re will­ing to take a lot of risk – the type that might give you sleepless nights – you can po­ten­tially turn $5000 into $50,000 in a mat­ter of weeks us­ing strate­gies such as con­tracts for dif­fer­ences, trad­ing forex or day trad­ing. But you are just as likely to turn that $5000 into noth­ing if you have no real idea what you’re do­ing.

“There are rare in­di­vid­u­als out there – I be­lieve a hand­ful glob­ally – who can pick mar­kets and add to mar­ket ef­fi­ciency,” says Steve Greatrex, fi­nan­cial ad­viser from Wealth on Track. “But it is not me – and it prob­a­bly isn’t you.”

An­other fairly high-risk ap­proach is some­thing called “dou­ble gear­ing”. This would in­volve us­ing the $5000 as a de­posit for a mar­gin loan and then us­ing this loan to fi­nance an in­vest­ment in a geared share fund.

High-oc­tane strate­gies like these aren’t for ev­ery­one. Which in­vest­ment strat­egy you choose will de­pend on how much risk you are pre­pared to take and how in­vest­ment savvy you are.

You can put your toe in the wa­ter and do it slowly. Or you do some­thing more rad­i­cal and jump right in.

We have asked three ex­perts to come up with strate­gies for a low-, mod­er­ate- or high-risk op­tion. These all as­sume you make no ad­di­tional con­tri­bu­tions of your own money, which means it will take time to reach your $50,000 goal. But of course you could speed things up by reg­u­larly top­ping up your in­vest­ment.

It’s also im­por­tant to ac­tu­ally start and not put off a de­ci­sion, be­cause the sooner your money is work­ing for you the quicker it will grow. Some­thing to con­sider is start­ing your own busi­ness, which Greatrex says is the best way to make real money. “It is a myth that you need lots of money to start one. In fact, a lack of funds drives in­no­va­tion and low­ers risk, par­tic­u­larly if you don’t bor­row money,” he says. “So start a ‘side hus­tle’ and see what hap­pens. Keep your main job, though, un­til you can see the way it will go.”

He sug­gests you choose some­thing that lever­ages your own skills or in­ter­ests, and that you know peo­ple may want. “If it’s re­motely suc­cess­ful you’ll have the ben­e­fits of more con­trol over your work­ing life. You won’t be ex­posed to re­dun­dancy, say in your 50s – ageism is alive and well in the work­place – be­cause only you can sack you,” he says.

‘ The sooner your money is work­ing for you the quicker it will grow

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