When you need to choose the best way to invest money from a 500 dollar loan, you should always pay attention to three main criteria: profitability, risk, and liquidity. With profitability, everything is clear—you take into account the amount of profit from a $500 loan. The risks can be 100% (the money will never be returned) and uncertain (you can lose part of the investment from the 500 dollar loan).
Liquidity is the rate at which your earnings can be converted into cash. We asked Nick Wilson, founder of AdvanceSOS cash advance service, for clarification, and he stated that the highest liquidity is with your money under your pillow but this is not the safest way. Many prefer the option of storing the amount of a $500 loan in a safe deposit box. We evaluated each of the ways to invest 500 dollar loans which will now be discussed using the weighting method. Each criterion was assigned a certain coefficient. Profitability received a coefficient of 1.5.
500 Dollar Loan Deposits and Bonds
A 500 dollar deposit at 10% per annum can be easily found in our banks. It is a crazy figure by European and American standards. They usually invest at 0.5%–1% per annum or even at a negative percentage. But the 500 dollar loan deposit has a huge drawback of inflation. The rate often falls along with the profit it previously brought.
If we talk about $500 loan deposits, then it is worth mentioning that it was possible to invest about $10,000 in a bank. There was a rate of about 10% per year for a 500 dollar loan which is quite a lot by global standards. Now this percentage has fallen to 2%–3% but still remains higher than in Europe and the United States.
When you invest a 500 dollar loan in a deposit account, do not forget about the mandatory personal income tax. Make sure that the account in one bank does not exceed the amount of a 500 dollar loan which is compensated by the state.
500 Dollar Loans
It could very well be a passive income tool. Over the past two years, you could have lent money to different people about 15 times on various terms offering them a loan of $500 or more. These were all business loans. They can be divided into four categories:
- Without collateral (3% per month);
- Under the car (2% per month);
- Mortgage (2% per month);
- Reliable borrower (1% per month);
- 3% per month—36% per annum comes out.
Without collateral at 3% per month, you can borrow from about five people and you should wait for the return of the debt with the amount of a 500 dollar loan.
A mortgage is a loan secured by real estate. This option is considered reliable if the amount of $ 500 or more is not returned on time as the object passes to you. Do you need $500? Then you need an object twice as expensive as a $500 loan. This is done because real estate can fall. In 2008, for example, the value of real estate fell by 60%. In general, a $500 mortgage loan can be called one of the most reliable in all cases. Yet when you lend secured by real estate, there is a possibility in 100% of cases returned.
The type of “reliable borrower” has only one representative in this category. He is given a loan at 1% per annum. Where to look for people who will borrow money from you, it is not possible to say for sure. One smart way is to talk to the guys who advise entrepreneurs and let them know when you’re open to suggestions.
Buying a Share in a Business
Buying a stake in a business based on $500 can be divided into two groups:
Now we are considering options for passive investment in business without entering into active operational management. You find a person and consider buying his business. Here it is impossible to talk about profitability on the example of some numbers. Likely, you will even have to report money if there is a shortage of start-up capital from a $500 loan. Everything here is too individual.
It is important to delve into and, if possible, find out why a person is selling his share. It is very difficult for a business to generate a margin to cover a 500 dollar loan and still make a profit. So be sure to see what potential business is hiding. Choose people who say what they have. People who are direct and open in communication. This way you will save your nerves and money.
Over the past few years, there have been quite a few public equity investments in businesses with checks as low as $500–$1000. For example, power plants and a network of filling stations are now being launched.
Stock Market and Cryptocurrencies
There are different ways to invest a 500 dollar loan that is less risky. It is possible to invest a $500 loan on your own or through fund managers. There are projects that analyze the crypto market: is someone going to speculate, that is, buy the amount and catch up on rumors that the cryptocurrency is about to rise. As a consequence, its price rises and they begin to sell quickly at this point. The Fund is just trying to anticipate such cases and makes good money on this.
There are many ways to invest this way. This is one of the best ways to spend $500. Some investors even buy entire sections of apartments. There are usually three levels of investors: some buy at the stage of “pitting,” some at the development stage, and others when everything has already been built. There is an option to remake the property after purchase. For example, from a large apartment to making several small ones for rent to students as the income is higher.
Author : Amanda Girard. Amanda is a senior financial copywriter at AdvanceSOS. She has more than six years of journalism experience, mostly in finance. She graduated with a Master’s degree in finance from the University of Oklahoma. Amanda has an excellent understanding of the finance industry.