Who doesn’t like earning money? If you think you need millions of dollars to get money working for you, think again. It is not about how much you invest but how long you stay invested. You may start earning money without doing a thing with a start-up investment of $10,000 in a long-term growth stock.
How to start making money for doing nothing
Most rich people who learn early in life to put money to work earn by doing nothing. But even to reach the level of doing nothing, you have to do something. Initially, you invest $10,000 in stocks of companies in which you see immense potential.
For instance, a $10,000 investment in January 2019 in the below stocks would have grown your money multifold.
| Stock | Stock Price in January 2015 | Stock Price in February 2024 | $10,000 invested is now |
| Shopify | $18.20 | $114.70 | $62,970 |
| Constellation Software | $732 | $3,656 | $47,528 |
| Nvidia (US$) | $37.04 | $701 | $189,270 |
| AMD (US$) | $23.05 | $171 | $74,170.60 |
And this is just a five-year gain. You spend five years graduating from college with a Master’s degree. You have to give your money more time to grow. As Warren Buffett says, “If you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.”
How do you identify such growth stocks? Two types of stocks can give you significant returns:
- A company with a competitive advantage in a secular trend and volatile stock, like Nvidia. Its graphic cards are unbeatable in the secular trend of artificial intelligence (AI) applications. You can keep adding more money to buy stocks in a dip.
- A company amid a turnaround in a competitive world, like AMD. Its central and graphic processing units have the second-largest market share. You can get better returns if you actively invest in such stocks. Buy more stocks at every dip, hold some for the long term, and book profits on some when the stock price is inflated. Even Buffett books profits from time to time and buys more shares at the dip using the money from profit-booking.
The first phase: Invest in high-growth stocks
BlackBerry (TSX:BB) stock has bottomed out and is at its 20-year low. Management issues and market dynamics delayed the growth. The company has been waiting for a turnaround for over eight years, and the results were unsatisfactory. It has a new CEO, and he has reversed the previous decision of a spin-off.
BlackBerry has its QNX software, which has demand in the automotive and medical Internet of Things (IoT) market. Its cybersecurity products are also a great catch. The problem is not in the products but in the execution and go-to-market strategy. It remains to be seen if the new CEO can improve the execution.
BlackBerry has a backlog of design wins for the QNX software, but the royalty on production is pending as the weak economy affected automotive production. Buying at this dip can help you benefit from a recovery rally. And even if BlackBerry decides to get acquired, an acquisition offer could boost its stock price. There were rumours of an acquisition consideration in August 2023, which sent the stock up 22%.
BlackBerry is the second type of stock that can generate significant growth in a few months and keep facing dip cycles. Active profit booking in rallies and buying the dip can help you grow your money.
The second phase is earning money without doing anything
A $10,000 investment in a high-growth stock can help you build wealth. Gradually, you can rebalance your portfolio and invest your profits in dividend stocks like BCE that give a 6% average dividend yield.
You determine a ratio, say 60:40 or 70:30, whereby you keep 70% of your portfolio in growth stocks and 30% in dividend stocks from which you can get money for not working.
The trick is to be invested till your last breath. Every time your portfolio grows from $10,000 to $30,000, you can shift 30% of the portfolio to dividend stocks and grow your passive income while generating wealth.
