How I Turned a Side Hustle into My Greatest Investment.
This is a guest post by Stefan Sharpe of The Millennial Budget.
Growing up on the small Caribbean island of Trinidad and Tobago, I was always inspired by affluent individuals. The summer between my sophomore year and junior year of college presented me with a unique way to accrue wealth. My dad told me a bank was going to have an IPO (First time they sell a stock) that summer and I should consider putting my money into the stock.
At that time, I honestly had no knowledge of investing or how an IPO even worked. Now I know many of you may be thinking, “Why I would I even consider something so risky?” Well there are two reasons:
- I remember one of my teachers saying, “Nobody ever got anywhere in life without taking a risk”
- After some analysis, I realized this was not a risky venture.
Below I will show you how I made money to fund this purchase as well as my investment thought process.
How I made money
Like many students, I had a job lined up for the summer. I was working at a bank and had a salary of $800 a month. For me, this was major money! This would be my main source of income that summer but I knew I wanted more money to invest. Therefore, I had to think of a reliable weekend side hustle.
I used to do chores around the house for my parents such as washing the cars and mowing the lawn. They would pay me $5 for each car washed, this included the inside being vacuumed, as well as $5 for mowing the lawn. Since we had two cars I basically made $15 every weekend.
While I was washing our car one day, my neighbor saw me and asked me if I wanted to wash his car after. I jokingly told him that I would only do it if he paid me, expecting the answer to be no. However, I was surprised to hear him say that he would pay me $10 per car.
I instantly told him yes and said I would be over as soon as I was done washing my parent’s car. The great part about washing my neighbor’s car was that they actually had three cars and he was willing to pay me for each of his cars. I thought I struck gold!
This got me thinking, “What if I asked other neighbors I was friendly with if I could wash their cars?” I asked two more families and to my surprise, they all told me yes and paid me $10 per car! Before I knew it I had a little car washing business in the neighborhood where I was cleaning nine cars for a total of $80 a weekend (remember my parents only pay me $5).
On top of this, the businessman in me asked my neighbors if I could mow their lawn for an additional $5. Only one neighbor wanted me too but hey, that was an additional $5 in my pocket. In total, I was making $90 every weekend which I put towards the IPO.
I worked at the bank for two and a half months so I earned $2,000. I did my weekend business for only six weeks which netted me another $540. In total, I had $2,540 from summer chores but I chose to only invest $2,000 since I wanted to bring some money back up to college… need to have that emergency beer fund right?
The investment thought process
Some of you are probably still asking, how was this a “risk-free” investment? First off nothing is risk-free but this was my rationalization: To put it into context, Trinidad and Tobago has a population of 1.3 million people. Small right?
Over half the country wanted to purchase into the IPO which caused the IPO Company to limit the number of shares people could purchase. In economic terms, the demand was far greater than the supply which, I believed, would push the price of the shares up once the stock was on the market.
When the shares were traded on the market the share price jumped 30% on the first day! The week following the launch, the price continued to climb and appreciated over 70%. After one year, I sold the stock for a gain of 80%, not too shabby for my first investment.
On top of these gains, the company paid special dividends for the first year which helped me double my investment. In total, I made a 102% gain on this stock. I must warn you, these results are not typical and I have yet to have this success again.
This experience left me with three takeaways that I would like to share with you:
- Do not be afraid to take a risk: I did not know much about investing or economics but I did enough research to make me feel comfortable with this risk. I urge you, do research!
- Use your eyes and ears: This means be aware of what is trending. Is it a fad or something with long term potential? A company that comes to mind is Facebook which has great long term potential and still, to this day, has a lot of buzz surrounding the company.
- Simple chores make great side hustles: My side hustle was nothing out of the ordinary but it shows ordinary jobs can still make a great extra source of income.
What was your best side hustle? Have you ever had any luck with investing?
Stefan is a young millennial who is finishing up his MBA. He will be sharing his journey as he embarks from college into the real world as he pursues financial independence at his website, The Millenial Budget.