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The $10k/$20k Challenge For 2011

6 January 2011 13 Comments

As I mentioned earlier, my goal this year is to pool capital.  I want to hoard cash and use it to take advantage of future investment opportunities that I think will arise in the near future due to economic instability and volatility.  You need cash to buy distressed assets, so that is what we will work towards this year.

I’m going to issue a challenge to the readers here to do the same.  The challenge is to either put away $10,000 or $20,000 depending on your income.  Let’s say you make $100,000 or more, then your challenge is $20k.  If you make under $100,000, then do either $10k or $15k (you decide).

This money should not include your normal 401(k) contributions or retirement savings because this is to be capital to be used towards a major investment or asset purchase in the near future.  It might be a business, it might be a cash-flowing property, etc.

You can make money in a bad economy, but you need money in most cases to do it.

What do you think?  Are you up for it?  We start now, and we’ll provide updates throughout the year.

13 Comments »

  • Joe said:

    Kevin, if someone were to give you $20k today. What would you invest it in?

  • TaJ said:

    Personally I got asked a question like that at a Christmas party. My answer was "I wouldn't right now".

    Dry powder, self-education and patience are the best investments you can make at the moment.

  • 20smoney said:

    I'm with TaJ, I would have dry powder right now. Patience. There's plenty of opportunities ahead.

  • Rob said:

    I have to say, I disagree with the comments by TaJ and 20smoney. With the foreclosure market the way it is right now, and the pre-foreclosure market even better, now is the PERFECT time to invest in cash-flowing real estate. There has never been a time like this (outside of the last few years and likely the next couple years) when real estate is relatively cheap AND interest rates are low. There's generally a flip-flop between real estate prices and interest rates.

    Also, it's a general misconception that you need money to make money. There are hard-money (aka private) lenders everywhere looking to pay you to buy a house! Look in the newspaper or google it!

  • Rob said:

    Don't get me wrong – I do think that it's a very good idea to get people to start saving more, though. Of course, I'd rather see the saved money invested (after you have enough of a cushion), but saved money is better than frivolously spent money!

  • David Webster said:

    Stock
    Ford is go for another 30%
    GM can go another 30%
    GE is looking good.

    I managed about a 40% return last year using margin account. 50k cash w/ 50k margin loan got me 19k profit off my stocks last year. I say 40% because I only used 50k of my money.

  • Bryan said:

    You managed a roughly 19% return. . .and if that was in a taxable account (likely since you cannot open a margin account in a tax advantaged account). . .likely even less considering the potential tax inefficiency of your investment strategy. Also, why take out a 50k margin loan when you aren't going to use it? You said you only used 50k out of a total of 100k (50k your money + 50k margin). You likely returned less than 19% also because of the interest that you were out for the 50k loan on margin.

  • Danielhendr said:

    I'm with Brandon on real estate. I actually have about 15 grand in the bank and was lookin to invest in this property but wasn't sure if it was legit since some of the wording in how it worked seemed questionable. I know the house is priced well cause I was friends with the couple before they let it go into foreclosure.
    http://www.econohomes.com/properties/4153.

    any feedback appreciated.

  • Kingpin said:

    I love the comments here- at first everyone Everyone agrees with Kevin to hoard cash but then want to use it to Buy Stocks with Margin, invest in Shaky foreclosure properties,or tout the laughable– it's a misconception that it takes money to make money. HUH??
    No wonder people are in such dire straits with this drivel .

    Taj and Kevin- well said. Keep your powder dry and the world will turn.
    It's margin of safety Ben Graham style.

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