When You Get $5,000 - Do This ASAP

When you're passively investing in money like this, a good return is generally considered to be around 10% a year. So if you invest $5,000 and get a 10% return, that's $500 over the course of one year, which might not sound like a lot of money, but the way that you win here, whether you're investing in stocks or real estate, is you're going to take that money and you're going to invest it, and then you're going to keep consistently investing that money. So maybe you invest $500 a month, every month for the next 10, 20, 30, 40 years. That's how you really build wealth here, because now it's not just your money compounding, but your money is also hopefully working to grow. The second part of this is you are also at the mercy of economic factors, market factors. We have seen stock market crashes and real estate crashes in the past. We have seen 16 recessions in the last century, and we've seen about 25 bear markets, meaning market crashes, in the last century. A bear market is when the stock market falls by at least 20%. So you got to understand markets go up and markets go down, but the way that you win here is by consistently investing your money week after week after week, month after month after month, year after year after year for the long term. So it's not just dealt with $5,000 in the today, it's about doing this consistently. And when we talk about doing this in the stock market, the advantage of the stock market is you don't need a lot of money to start. It is very easy to pull your money out, and it's very accessible because anybody can do this right off of their phone. With real estate, it's different. Your money is less liquid. Even if you use a crowdfunding tool, once you invest your money, it's generally tied up for three, five, seven, or 10 years because, well, it's a physical asset. With real estate, it's not as accessible because generally you need a lot more money to invest in real estate. Here, we're talking about crowdfunding deals and not just that. With real estate, you own a physical asset. When you're investing in properties, you're owning something that you can see, feel, and touch. When you invest in the stock market, you can buy one share of Amazon and walk into the Amazon factory, and nobody knows who the heck you are. Versus with real estate, if you buy a property, well, you're the owner. Now, again, when you're just investing in somebody else's deal, it's kind of like the stock market where nobody really will know who you are, who's operating the deal, but you have a little bit more closer ownership where you can see, feel, and touch the property. Versus here, it's a little bit different because you're getting a piece of paper that says you own a company. Now, with the stock market, you can automate the whole process where you can find a brokerage and now create a set-it-and-forget-it system where you're just going to invest every week or every two weeks or every month into whatever it is that you want. But the whole idea here is you're working to just buy a piece of the economy because when you go to work and you earn money, you got to go to work to get paid. You don't go to work, you don't get paid. Maybe you got some pay time off, but eventually you're going to have to work to get paid. If you stop working, you stop getting paid. With the stock market, now you're owning the company. You're owning the companies, you're owning the economy. So now when the economy is working, you're working to get paid. Now, does that mean the markets always go up? No, we just talked about that. But the whole idea here is you're working to get paid even when you're not working. Same with real estate. You're working to get paid even when you're not working and you have the ability to get paid with cash flow with both of these. And the stock market is called a dividend in real estate. It's called rental income. A dividend in the stock market is when a company has extra cash in their bank account at the end of the year. McDonald's makes billions of dollars of profit. They have this extra billions of dollars in their bank account at the end of the year, and they can do three things with that cash. They can save that money for an emergency. They can use that money to reinvest into the company by opening new stores, making better burgers, making better fries, or they can take that money and give it away to their shareholders. And what we've seen is that a lot of the mature companies, the older companies that have more established profits, what they start to do is they reward their owners. And the way they reward their owners is by giving that money away to their owners. And there's two ways that a company can give this money away to their owners. The first way is by doing what's called a stock buyback. That's where they take that money and they dump it back into their own stock to make the stock price go up. So if you bought a stock, it might go from $100 a share to $120 a share. You made more money on paper. It's not actually money in your bank account until you sell, but your stock value has gone up. That's the goal of the stock buyback, is to make the stock go up. The other way that a company can give this money away is to just write you a check. This is what a dividend is. Now, they don't generally send you a physical check anymore. They just deposit this money into your brokerage account, and that's cash that you get for doing nothing except owning the stock. Now, you can choose to take that cash and have it deposited into your brokerage account as actual money that you can withdraw, or you can take that money and automatically invest it to buy more shares of the company, and it depends on where you are in your investing career. If you're just getting started, it's probably more valuable for you to keep reinvesting that money because that means you can buy more of those shares of that thing that's paying you the money. That way, you can work to increase your cash flow. You can work to increase your dividends. If you have enough dividend income coming in that you can use this dividend income to pay your mortgage, to pay your rent, to pay for your lifestyle, but now just have it deposited into your brokerage account, and that's money you live off of. See, that's what really wealth is, but it doesn't just happen with $5,000. Again, the key is using that $5,000 as seed capital. Maybe you start slowly dripping that money in there, but the key is to keep consistently investing your money and investing your money for the long term. That's where the wealth is built. If you want more specifics on how to invest in stocks, how to invest in real estate, again, you can check out Market Briefs, my free newsletter. I have the link for you down in the description. I also have other videos on my channel where I go over specifically how to invest in stocks, how to invest in real estate. If you enjoyed this clip, and you want to continue your financial education journey, I have another video that I think you'll love. All you gotta do is click that button right over there, and for those of you who want to stay up to date on the top finance and business news, you can join Market Briefs, my free financial newsletter, by clicking that button below. Thank you for watching, and I'll see you in the next one.