How to Create $500 in Cash and Turn it Into $5,000 Now
Written by Amy Legate-Wolfe at The Motley Fool Canada
It’s a really difficult time for Canadian investors. Right now is a perfect time to invest when the market has gone down so much. However, there is one reason it is below. Canadians simply can’t afford to put a lot of cash into stocks while inflation, interest rates and other problems threaten their income.
Today I’m going to share a powerful path to just $500 in income to invest. It’s nothing crazy and nothing that will distract you from your daily work. Once you have that $500, you can invest it in this top dividend stock that should someday soon turn that $500 into $5,000.
Just make $500
There are several methods to earn $500 income and I am sure you have heard many of them. But let’s face it; You probably already have these covered if you can’t scrape together $500, right? So aside from selling items online, reducing coffee consumption and turning off the heating, there’s really nothing new.
Instead, let’s look at some side hustles you can do online in your free time. These won’t last long and can certainly add up to $500 in a short amount of time.
One incredibly necessary side hustle you could try is proofreading for those who have English as a second language. If you just go to a site like UpWork, you can find literally thousands of proofreading jobs. As long as you have an excellent command of the English language and grammar, you can correct common mistakes. If you do just three of these gigs, you could make $500.
UpWork in general, along with other similar sites, is a great place to find those side hustles to do in your free time. They allow for short commissions and include things you are already good at! This can include graphic design, virtual assistance and more. And again, few of these contracts can quickly add up to $500.
Keep it up or not!
The rest is up to you. You may find that proofreading for some extra money is something you enjoy doing every now and then. Or you can just take the $500 and hit the road. Today we look at what happens when you do the latter.
In this case, you take that $500 and invest it in a safe stock that’s currently down. There is a lot to find but the best I would consider is Canadian Imperial Bank of Commerce (TSX:CM).
CIBC stock has the highest dividend yield of the Big Six banks at 5.73%. Trading in value territory at just 8.33 times earnings, it’s considered cheap as shares are down 19% year-to-date. Also factor in the recent stock split and you can get a great price right now too.
Invest!
Once you’ve invested that $500 in CIBC stock, you’d earn about nine shares today for about $30 in annual passive income. That’s not a lot, but you could certainly turn even that small amount into $5,000 one day.
First, let’s look at CIBC stock and its compound annual growth rate (CAGR). In the last two decades, this has been around 11%. The dividend has increased by a CAGR of around 5% during that time. But you will earn a little more next year.
Even if you miss the bottom of the market, CIBC shares should rally back to pre-drop prices within a year. So let’s say these nine stocks do just that. They’ve already turned $500 into $724! From there, we take that CAGR into account and reinvest your dividends.
bottom line
Should stocks recover in a year and go on their normal path from there, it would take less than 16 years to turn your $500 into $5,000. After 16 years, with these results, it would become $5,617. Now imagine if you kept doing these odd jobs. You can earn a lifetime income with just a few hours of work.
The post How to Make $500 in Cash and Turn It into $5,000 first appeared on The Motley Fool Germany.
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Stupid contributor Amy Legate-Wolfe has positions at the CANADIAN IMPERIAL BANK OF COMMERCE. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
2022