22 June 2007 2 Comments Print This Post  Email This Post

A good online savings account will earn you a little over 5% a year. I wrote about that in my Sometimes Change is Good post. We’re all looking to find a good investment vehicle that gives us a high annual return, something like 10% and up is generally good. What if I told you that you can potentially earn a 176% annual return on investment from something you see each and every day? or a 100% annual return from someone else’s garbage? Believe it, there are lots of great investments all around you if you take the time to look for them.

Buy Low, Sell High.

We’ve all heard of buy low and sell high. Its the foundation of any investment be it real estate or stocks. Think about all the things you come across every day that you can buy low and sell high. I mentioned a 176% annual return from something you see each and every day. That is exactly what a friend of mine invests in all the time. My friend is a mechanic, and to supplement his income he is always on the look out for good deals on cars to resell. This would be a typical transaction:

Car A
Purchase Price=$1500
Sell Price=$2200
Repairs=$200

Profit=$500
Time to repair/sell= 2 months

On car A, he makes $500 on the car in 2 months at an initial investment of $1700. Thats $250 a month, which is a 14.71% return on investment, or 176% annual return (14.71 x 12mos). Great investment right? Even factoring in his time and effort, its still a great return on investment.

Your Interests and Expertise.

You don’t have to be a mechanic to find great investments like my savvy buddy. Think about the interests, hobbies and expertise that you have. Do you like grand pianos? Are you good with computers and electronics? Do you have a skill that you can offer as a service? Remember, you simply want to buy low and sell high, like an investment property or a stock. You are on the lookout for undervalued assets and you are selling them at market price.

Personally, I have a fascination (addiction) to high line watches like Rolex, Omega, Breitling etc. Often times I’ll see people who inherited a watch or they need to sell one quick, under market price. I’ll usually jump on it, and because I’m knowledgeable with watches I can tell how much its really worth. I’ve done this with watches and watch parts among other things.

How to Find Undervalued Goods.

This isn’t rocket science and you don’t need any fancy graphs or charts. There are simple ways of finding undervalued goods.

1. Look. Its as simple as that. Look on craigslist, the newspaper, ebay etc regularly. Something is bound to show up.
2. Ask. If you can’t find them yourself, simply ask. Post in forums related to your item, craigslist, even the newspaper. I will do this soon with an ad that says “Got a Rolex? Need cash? Call me at xx” Ask your friends, family or associates if they know anyone who wants to sell. Even if they don’t have something to sell you, the next time they do they’ll have you in mind, and the same applies if they know someone who wants to sell in the future.

Take a look around and think about your areas of expertise. It may seem like a small return in terms of amount, but do this enough and it does add up. My friend can sell anywhere from 1-3 cars a month. Hes at the point where he is like a small dealership without the overhead. The deals are all around you, find them and you’ll see triple digit returns.