How I Would Invest $1000 If I Were In My 20s

Have you ever wondered how to turn $1,000 into a small fortune? Maybe you think it’s impossible, especially as we’re facing a devastating recession. However, today, I’m setting myself a challenge to prove this can be done. I’ve hand-selected five different investments. These include index funds, business, art, individual stocks, and cryptocurrency. The data suggests these are good investments during a recession. Therefore, after looking at each in detail, I’m prepared to put $1,000 of my own money into every asset so we can see the results together. However, this might not go quite to plan. I never thought I’d spend $1,000 on this. No, get out of it. Look at that.

If you gave me $5 every day, and I gave you $50 back, would you be happy with that deal? Of course you would. So why aren’t you taking it? Let me explain.

Investment 1: Index Funds

This leads me into Investment 1: Index Funds. I’m giving this a 3 out of 10 on the risk scale, as it’s been delivering solid returns for decades. The figures don’t lie. If you invest $5 every day, let’s call that $150 per month, into the S&P 500 at an average return of 8% for 45 years, then you would have $791,000.

Now, according to Google, there are 16,436 days in 45 years. So now if we divide $791,361 by 16,436 days, we can see that every $5 you put in has turned into $48. That’s pretty close to $50. Now I bet that’s got you thinking about your $5 Starbucks Frappuccino a bit more carefully.

Index funds are seen as one of the safest investments over the long term. However, during a recession, they become even more appealing. This is because instead of betting on individual companies to pull through the tough times, you’re purely investing in a long-term success of the whole market. Think of it like going to a horse racing, instead of putting all your money on one prized stallion, you decide to spread it across all the top performers. So now if one or a few of them lose, it should be okay because you will benefit from the others winning. This is a proven winning strategy. Over a 15-year period, 92% of the top hedge funds are trailing the S&P 500 Index. I mean, these guys are meant to be the experts, but they are getting destroyed by a very hands-off investment which is so easy to manage.

You may think the S&P 500 isn’t very global, as it’s only made up of the top 500 American companies. However, as of 2017, only 70.9% of the companies that make up the S&P 500’s revenue were from the US. So it’s a lot more global than you might first think. But if you want to spread your money further, then there are a lot of different funds that cover different countries and companies. I have some of my money in emerging markets index funds as I believe we’re going to see a big shift in global powers over the next five to ten years. Even though I also invest elsewhere for bigger returns, I always gradually buy index funds, whatever the market’s doing, be that trending up or down. There’s multiple brokers you can use. If you’re in the US, you can use public.com. I’m going to use my UK Vanguard account. Let’s put $750 into the S&P 500 and $250 into a global index. There we go, all done.

Investment 2: Business

88% of millionaires are self-made entrepreneurs according to Fidelity Investments research. So that brings us onto Investment number 2: Business. I’m giving this a 3.5 on the risk scale, as unlike index funds, you could lose all your money in a bad business move. However, the power is in your hands, not someone else’s. If you haven’t started a business, then now could be the perfect time, as we head into a recession. There’s a good chance you’ll be starting from your home and have minimal employees and very little overhead to maintain at this point. That combination puts you in a great position to provide an inexpensive solution and win over customers.

In an economic downturn, businesses and consumers alike are looking to cut costs, which may allow you to break into the market. But your window of opportunity could close soon, as recessions are typically short-lived and followed by long periods of growth and prosperity. The period after World War II, for example, is considered the greatest expansionary phase in modern times. Similar points can be made for the years after the energy crisis recession, the Gulf War recession, the dot-com bust, and the great recession. Each recession was followed by a longer period of growth than the period of recession. The biggest mistake I see people making on a daily basis is putting all their money into assets they don’t have direct control over. As you know, I’m not against the stock market. However, I don’t think enough people value their skill sets.

I was on a call the other day with someone in my free Discord and he asked me an interesting question. He was making around $400 per month selling PDFs that help people in his country pass a state exam. He was wondering how he should invest that money to make more. Later on in the course, I discovered that he was currently only selling these templates with organic marketing, which proves there is a real demand for his product. If he just invested $200 per month back into paid advertising within his business, he could see an immediate return greater than any stock market investment. I think of it like starving a plant of water. You can’t ever flourish in a drought. So, if you’ve been overlooking business, then I implore you to dream big and prepare for the next expansionary phase.

At the moment, I’m focused on growing my podcast Strike It Big. We really need a way for episodes to be edited as we film them. That’s why I’m going to invest this $1,000 into some new technology, which should save me time and help us post weekly episodes.

Investment 3: Fine Art

Question: What do Picasso and Banksy have in common? Apart from being era-defining artists, the answer is you can invest in their work for a fraction of the asking price. That brings us onto Investment 3: Fine Art. I’m giving this a 5 out of 10 on the risk scale. You might not have considered fine art as a potential investment. To be honest, neither had I until I looked into the shocking stats. You know the S&P 500, that investment many millionaires don’t stop banging on about? Well, contemporary art investments have actually done better than the beloved S&P 500 over the last 25 years. To be exact, the S&P 500 had a 9.5% average annual return, whereas contemporary art averaged 14% price appreciation.

But surely, if we’re facing a recession, the demand for these expensive paintings will drop, and then the value of our investment will plummet, right? Well, actually, the global demand held up pretty well during the last great recession. In 2007, global auction sales topped $32.9 billion, while in 2008, the figures hit $28 billion. This only shows a slight dip in demand, and it was still higher than 2005 when auction sales were only $17.2 billion. Maybe more importantly, during 2009, Yves Saint Laurent’s art collection set a new record for a single owner collection, totaling $483.8 million. To put this into perspective, this happened just five months after the complete collapse of Lehman Brothers and the markets. Again, if we look at our old friend the S&P 500, this didn’t recover to pre-recession levels until 2013, two years later than the art market.

Due to the eye-watering prices these paintings command, unfortunately, this asset class has only been accessible to the already rich and powerful. There is also a degree of skill involved with picking the right pieces that the average investor just wouldn’t understand. So, how are we going to invest this $1,000 in art? Well, I’ve been doing some research, and companies like Masterworks really stand out, as they use data that isn’t available to the average investor and a top research team in order to determine which high-end artist markets have the most momentum. They’re even asked by worldwide groups like Citi to collaborate on reports about the art market. This just shows how comprehensive data they have. They help people get fractional pieces of art, rather than the whole thing. This isn’t NFTs. This is breaking a painting into shares so people can add a piece of it to their portfolio. Their incentives are also aligned with the investors, as Masterworks only make money when they sell a painting for a profit. With this said, I still think investing in art is for the long term, and that’s why this platform doesn’t actually accept investors that are older than 70. Oh, dammit! Looks like I can’t invest $1,000 after all. Only kidding, I still got plenty of years left in me, you cheeky buggers.

Masterworks aims to hold its art pieces for three to ten years, at which point it then sells the painting and distributes the profits among investors, based on their number of shares. But so far, the paintings they have sold ahead of schedule have delivered 25% net returns for the last four years in a row through COVID, a bear market, and rampant inflation. Past performance is no guarantee of future results, but that’s pretty incredible. So with that said, let’s invest $1,000. I really like Mark Bradford’s Promised Land. It even shows a progress bar that lets us know how much of the asset has already been bought. The painting is valued every quarter, so I’ll be keeping an eye on this closely. If you also want to get involved, then I’ll leave an exclusive invite link in the description below.

Investment 4: Individual Stocks

Imagine you invested $1,000 and woke up in the morning with $10,000. This is what most people dream of, and it has happened time and time again with Investment 4: Individual Stocks. However, I’m going to give this a 7 out of 10 on the risk scale, as finding the best stocks to invest in isn’t an easy task. Stock picking gives you the ability to beat the market, but bear in mind that 90% of people lose money, hence the high-risk scale rating. If you’re interested in giving this a shot, then now could be a very good opportunity, as the market has fallen from the highs of the pandemic, and there are lots of deals available if you can find them.

During a recession, it’s more important than ever to invest in well-managed companies that have low debt, good cash flow, and strong balance sheets. You’re able to find all this information out for free on Yahoo Finance. Some industries are also considered more recession resistant than others, such as healthcare. If you think about it, people can’t put off most healthcare spending. When you’re sick, you need to see a doctor and buy medicine. Walmart and McDonald’s are also great examples of companies that have thrived during past recessions. This is because when people have less money, they flock to discount stores like Walmart and drown their sorrows in comfort food such as McDonald’s burgers. However, I’m going to invest my $1,000 in Apple, as they sit on the luxury end of the market, and people would hate to give up their nice phones. It’s also important to remember that most people don’t even buy their phones these days; they finance them through contracts. This gives people access to iPhones and puts money in Apple’s pockets regardless of their customers’ bank balances. $1,000 of Apple bought. By the way, if you want to pick up a free stock worth up to $1,000 from public.com, then I’ll leave a link in the description below.

Investment 5: Cryptocurrency

When you hear about people becoming millionaires from a simple $1,000 investment in a short period of time, you can only be talking about one thing: Investment number 5 is, of course, Cryptocurrency. And I’m giving this an 8.5 out of 10 on the risk scale. Back in the day, if you’d mentioned cryptocurrency to me, I would have disregarded it as a short-term craze. However, as Bitcoin rallied, I had to take notice. The more I dived into the technology behind crypto, the more interested I became. I made a goal to invest around 5% of my portfolio and faced some challenges along the way, such as my bank account being closed down. This is because Bitcoin is a digital currency that is not controlled by any authority or bank. And many experts believe crypto and blockchain technology will go on to disrupt many industries such as banking, law, cybersecurity, insurance, and more. The top ten cryptocurrency coins are always fluctuating, but the two that remain in first and second places by market cap are Bitcoin and Ethereum, which I like to call the blue-chip cryptos. These are the most popular and safest coins. At the moment, as we’re heading into a recession, naturally, prices across the board have dropped quite drastically. A lot of investors see this as a great buying opportunity. Crypto is certainly not something to overlook, but should only be part of a diversified portfolio due to its high risk. I’m going to invest $500 into Bitcoin and $500 into Ethereum.

According to Hip Hop DX, the rapper Drake has reportedly bet over $1 billion via online gambling since December 2021. This brings us onto something I never thought I’d be doing on this channel: online gambling. This is a 10 out of 10 on the risk scale. The rise of online gambling is creating millionaires, but is it the gamblers making millions or the creators? Let’s put this to the test. I’m prepared to put $1,000 of my own money on the line to prove to you how quickly it can evaporate. I never thought I’d spend $1,000 on this. Now, the following clip didn’t go to plan and goes completely against my narrative that gambling is bad, so much so that I nearly didn’t show you this clip. Honestly, after this happened, I didn’t think this clip would see the light of day. Whenever I’ve done a challenge on this channel, I’ve always kept it 100% real, such as spinning a crypto wheel or throwing in an investment picking dart. So here’s what really happened. Curtis, you better come in. This looks quite exciting. Look, we got all these lollipops going on. I never thought I’d be doing this. Right, ten free spins. All right, here we go then. Press anywhere to continue. Yes, straight in. Oh, there’s another one. And yes, and some more. And some more. Oh, we got a 50X. What? What? What? What? $4,000. We’ve actually won $4,000. No way. It keeps going up and off and up. No, get out of it. Look at that. That’s crazy. That’s sensational. That can’t be real, can it? I don’t think it is. Obviously, we weren’t expecting this result. It’s extremely lucky, and the chances of something like this happening are very slim. After a big win like this, many people get sucked into gambling and are always chasing that feeling again. Over the long term, the house always wins. It’s like the opposite of investing when, over the long term, you have a high chance of success. Gambling is just a rigged game. To demonstrate how unpredictable games like these are and how it can easily go the other way, we gave it another $1,000 spin. We’re not getting anything. This just shows how rubbish gambling is. Oh, no. It is pretty bad. Considering we put $1,000 in, and now we’ve got what? How much left? Right, $350 or so, and we put $1,000 in. Yeah, terrible investment. That’s not a great investment, guys.