A Guide to Playing With Money
By Steve Gillman
If you have some cash saved, there are several good options
for playing with and profiting from that money. These do not
involve complicated businesses or boring bank accounts. Even
if you don't have cash, if you have credit cards which allow
cash advances, you can pay 18% interest and still make money
with the money raised in that way. These are ways which mostly
aren't quite a business because you can do them once or only
when you feel like it. In other words these projects have a clear
beginning and end. Here are some examples to get you thinking
in the right direction.
Buying and Selling Art
To be able to buy and sell art for a profit consistently requires
a lot of knowledge. On the other hand, if you just want to play
around with these investments to see how you might do, you can
start without much risk. Visit thrift stores, yard sales and
the basements and attics of friends and family to discover decent-looking
paintings and other artwork. Of course it would be ideal if you
could occasionally find a rare piece by a known artist, but that
isn't the only way to go.
Let's look at an example of how to make this work with decent
art by unknown artists. Suppose you are at an auction of the
contents of a self-storage unit, one of those sales they do when
the renter of the unit doesn't pay the monthly charge. You see
a nice wall hanging that can be sold for $200 in a consignment
store you are familiar with. You might get $120 of that (a 40%
or 50% commission is common in consignment situations). You can
bid up to about $60 and still make a decent profit if your guess
about the value is correct.
This isn't a risky project to try. After all, if you are wrong
and the art sells for half of what you projected, you'll essentially
break even. If it doesn't sell at all you can give it away as
a gift and you have learned a relatively cheap lesson about your
skill level in art appraisal. With experience you might get good
enough at valuation and at buying cheap to make a profit on most
pieces, or you might lose a few hundred dollars. Playing with
your money in this way is certainly less risky than many investments.
Investing in the Expertise of Others
What the heck was a 1976 "Stingray Corvette," and
why would anyone want one? My buddy John had to show me several
car magazines before I understood why an old fiberglass car was
a good deal at $2,300, because I knew nothing about cars at the
time (and I know only a bit more now). He eventually convinced
me to put up the money for the purchase, and after a new transmission
that cost $900, he sold the corvette quickly for $4,300, netting
us about $1,000. I took half the profit ($500) for providing
the funding. The entire process took two weeks. Since the car
sold a day after it was ready to the first person to look at
it I suspect we could have gotten a higher price. All the old
Corvettes listed for sale in the magazines John showed me were
selling for at least $5,000.
I've done this several times over the years with friends who
know cars but don't have cash to invest in them. By the way,
this does not really require your own cash if you have decent
credit. After all, if I had paid 18% interest and a $50 cash
advance fee to raise the money with a credit card, my profit
would still have been over $400, and John did all the work. I
love playing with money. Do you have any friends who know everything
about boats but never have any money in the bank? Other items
you might buy, fix and sell with the help of knowledgeable friends
include motorcycles, snowmobiles, and hot tubs.
Be a Loan Shark
There are always people around you who occasionally need money
for a short while. That is an opportunity for you if you want
to help them out. For example, many years ago my friend got a
good job with a construction company because I loaned him the
$300 he needed to get drywall stilts and a few other tools. I
did not do this just to be nice, though. I made money on the
When I was doing loans like this I never charged less than
a $5 per week for the "loan fee." I didn't call the
charges interest, which made it seem less like usury, even if
the loans were still technically in violation of some law. I
haven't done this for many years now, and the legality is certainly
a question in some places. If you have any qualms, check the
laws in your area and try to stay within them. Put it all in
writing, even if this is nothing more than a handwritten note
from your borrower agreeing to pay back the money according to
specified terms. Also, if you want total security, take collateral
(that's how a got a good television set for $90).
Playing With the Casino's Money
I worked at a casino for years and I saw a lot of people foolishly
writing down the numbers that came up on the roulette wheel.
Foolishly, I say, because their their theories were nonsense.
Casinos will always welcome these players and even hand them
the pen and paper.
One guy, however, was actually scientific about it. By finding
a bias in the wheel, after "charting" it for 5,000
spins, he made thousands betting on just one or two numbers.
When a number comes up, it pays 35 to 1, but one of the numbers,
because of manufacturing imperfections or whatever reason, was
coming up 1 in 27 spins, instead of the average 1 in 38 spins.
So all he had to do was bet $10 a spin, and he profited $80
for every 27 spins of the wheel in the long run. That's about
$100 per hour. The ups and downs are dramatic though, so this
is not for the faint-hearted. In this case, I saw him lose as
much as $700 in a night. Also, not all wheels have biases (they
eventually replaced that wheel). So have you ever tried
"card counting" in blackjack...?
By the way, the rest of that story and the exact formula used
to beat the roulette wheel is in my ebook, You
Aren't Supposed To Know - A Book Of Secrets.
Buying and Selling Estates
We recently met a couple who buy estate items, sell some of
the things at flea markets, and then run the rest through auctions.
They claim to have made a living doing this for years. They load
up a trailer after negotiating to buy a whole house full of stuff.
Then, if they don't want to do the flea market thing, or after
they cover their cost by selling a few key items, they just auction
everything on Sunday afternoon for a nice profit.
If you are a good judge of value and if there is a regular
auction nearby, you could do the same with rummage sales. Offer
to buy everything that is left at the end of the day, which resolves
the seller's problem of putting everything away or hauling it
to a charity thrift store. Set the price so that selling one
or two of the items you are most familiar with will cover your
cost. The rest will provide your profit. Auction it all off piece-by-piece.
The auction where we met the entrepreneurial couple lets anyone
sell their stuff, with no fee to enter. They just take a 25%
commission on each sale.
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