Market Overview

3 Side Hustles With Low Startup Cost And High Potential

Share:
3 Side Hustles With Low Startup Cost And High Potential

You can make some extra money without having to splurge on large upfront investment.

Before embarking on such a journey, however, make sure you are up for it. There are no guarantees and whether you make any profit or not is up to you and how well you research your options.

Here are some ideas.

Penny Stocks

Penny stocks are small-cap stocks that trade on less popular exchanges.

The name suggests that such securities cost pennies, which was the case a long time ago when a penny stock was going for less than a $1. Now, however, a penny stock can sell for as much as $5.

A common and untrue myth is that all under $5 stocks count as penny stocks.

SEC exempts from a “penny stock” status companies that have been operational for less than three years and hold at least $5 million in net tangible assets and those that have been operating for more than three years and hold more than $2 million in net asset value.

Another inaccurate and popular belief is that all penny stock securities relate to small, unknown companies. At the end of December retail giant J C Penney Company Inc (NYSE: JCP), an establishment that’s been on the public market for 90 years, fell to a truly penny stock value of $0.92.

What To Know

Trading penny stocks comes with pros and cons.

The first thing to know about them is that penny stocks can be volatile—they are not a set-it-and-forget-it investment that you keep in the back burner until it comes back with some returns.

Penny stocks require time and skills to trade successfully and are a subject to rapid changes, so to deal with them you’ll need to keep a regular eye on your portfolio and act swiftly.

That being said, this type of securities could be a viable option if you are looking to make extra (or even full-time) income without much initial capital.

Though data on smaller companies is still scarce compared to the big players these days it’s easier than before to trade penny stocks thanks to the abundance of information on the internet.

Did you know that the Associated Press is using AI to generate quarterly earnings reports, which has resulted in a fifteenfold increase over manual reporting, thereby helping hundreds of less-known companies get their earnings data to potential investors and traders?

Experts Talk

In 2005, Warren Buffett had a talk with students at the University of Kansas.

One of them asked the investor if he still stands behind a 1999 statement that “it’s a huge structural advantage not to have a lot of money” and that he “could make 50 percent a year on $1 million.”

Buffett confirmed he still believes that and that “[i]t would perhaps even be easier to make that much money in today’s environment because information is easier to access.”

Berkshire Hathaway’s (NYSE: BRK-A) CEO proceeded with an example of how he found a company that was trading at $3 but earning $20 per share.

Finding such gems takes work, however, or in the words of Buffett: “You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map – way off the map.”

Swing Trading

Swing trading is one of the three main ways to trade stocks, the other two being day trading and long-term (trend) trading.

Swing trading differs from the other two in that stocks are kept for more than a day but no more than several weeks; which is longer than day trading and shorter than long-term trading (which technically is investing).

The term refers to figurative swings that traders go through when selling or buying stock to gain a profit or limit potential losses.

What To Know

How can you make money swing trading?

There are two general options to choose from when deciding what stocks to buy: volatile or sedate stocks.

The former are prone to rapid and frequent ups and downs, while the latter tend to have more stable movements.

Both types present opportunities and challenges.

While volatile stocks bring more potential gains when they go up, they are also riskier and harder for inexperienced traders to predict.

Sedate stocks are more predictable but also bring less “action,” which might not be an ideal way to learn how markets work.

What makes swing trading a suitable investment opportunity is that an initial capital of only a couple hundred dollars can suffice.

Swing trading is also a hands-on way to learn how to do technical analysis—how to make trading decisions based on past and expected performance of stocks.

Experts Talk

There’s hardly a ranking of best traders of all time that doesn’t feature Paul Tudor Jones II.

Currently worth $5.1 billion, Jones reportedly made $100 million by successfully predicting the Black Monday crash of 1987.

Aside of his skills, he is famous within the trade circles for his insightful thoughts on trading including swing trading, for which Jones says it “misse[s] a lot of meat in the middle, but catches a lot of tops and bottoms.”

Other practical advises that he has given to traders is not to have an ego, to keep level-headed and to cut their losses on “bleeding” portfolios, i. e. to not hang on to them at all costs.

Flipping Houses

To “flip” a house means to buy a house and quickly sell it for profit.

Because real estate markets don’t usually undergo overnight surges, to sell a house for profit involves purchasing a low-value property and fixing it up to raise its value.

Of the three low-investment high-potential side hustles described in this post, house flipping is technically the one with the highest initial costs as it requires purchasing a revenue-generating property.

What To Know

There are several ways that you can get started with flipping houses without having to pay for the property by yourself.

Private investors, hard money loans, and crowdfunding platforms specific to house flipping are all popular methods to finance a house flipping project without money down.

An alternative to these financing methods is wholesale house flipping.

Wholesaling is more like brokerage in that you purchase a house but then transfer the contract to another buyer before paying for the property.

Like any other real estate deal, house flipping is susceptible to market bubbles which after bursting depreciate real estate’s value.

Nevertheless, house flipping can be a profitable venture especially if you have some experience in trading real estate or are handy enough to do fix-ups with little or no help from subcontractors.

Other things to consider when evaluating a possible purchase is to go for properties that only require minor upgrades.

Large fix-up projects like replacing plumbing and electrical systems or dealing with mold and pests might bring the renovation costs so high as to make the property unprofitable.

Experts Talk

House flipping is an investment opportunity for any budget, but it is a favorite venture for a bunch of A-list celebrities.

Ellen DeGeneres is among the famous people fond of flipping properties reportedly having spent $145 million on it.

Jennifer Aniston, another Hollywood star known for flipping homes, in 2006 bought a $13 million Beverly Hills mansion which she renovated and sold in 2011 for $35 million.

However, real estate experts warn that “overdoing a home in a specific style […] may actually hurt your resale chances in the long run.”

Non-celeb buyers might get scared away from a property that looks too expensive or extravagant.

Other things to keep in mind is that renovations are prone to delays, expenses tend to flow over the budget, and selling comes with related costs.

Diversifying your revenue sources is always a smart move and thankfully there are many ways to start earning extra income from home. All of the options laid out in this post have the potential to bring high profit on a low startup capital. Of course, whether you make any money out of them depends on a host of factors not the least of which is your willingness to learn.

Posted-In: Paul Tudor Jones Warren BuffettEducation Entrepreneurship Startups General Best of Benzinga

 

Related Articles (JCP + BRK-A)

View Comments and Join the Discussion!
Lightning Fast
Market News Service
$199 Free 14 Day Trial
Book A Demo
Learn How You Can Succeed In The Market With Benzinga Pro

Fastest Market News

Real-Time News Alerts

Customizable News Filters

Book A Demo

OptiNose Analysts Projects Prescription Growth In 2019, Beyond

Experts React To The Fed's Pause