I have a friend. I’m not going to say his name because he’s a dumb-ass.
He’s a fellow journalist, so suffice is to say he doesn’t make a lot of money. He recently informed me that he dropped $100 on Powerball tickets.
Like I said, he’s a dumb-ass.
Now granted, the current Powerball jackpot is nothing if not tempting. It’s up to $700 million, the largest lottery prize in U.S. history.
But the odds of picking the right numbers? 1 in 292.2 million.
The statistical chance that a freaking meteorite will fall out of the sky and splatter you like a cockroach is 1 in 700,000.
And yet, if you walked around nervously staring at the sky, people would never stop laughing at you. But stand in line for a lottery ticket? Everyone’s like, “Hey, can you pick one up for me?”
At $2 a ticket, my friend has acquired 50 tickets, which he’s convinced is a strategic move, putting him at a mathematical advantage over the people who only bought one ticket.
“You know you’re an idiot,” I helpfully informed him.
He just shrugged. “I don’t care,” he said. “It’s just a hundred dollars. I can afford to lose it. What’s the harm? I want to take a wild risk on my future. Where else should I throw that money?”
It’s an interesting question. When you think about making a meaningful investment, $100 seems laughably small.
What can you actually do for just five twenty dollar bills? Nothing all that significant, right? It’s not like you’re going to buy the perfect stock at the perfect time and next month you’re a millionaire.
Although according to Jim Cramer, host of CNBC’s Mad Money, that’s exactly what we should be doing.
“Every penny of money, every penny, until you have saved $10,000, must, must, must be invested in an S&P 500 index fund,” he tells us. “The stock market has been the most wonderful wealth creator in history.”
That sounds like an exciting plan. Unless you read any news at all, which recently has included scary headlines like “Stock market plummets” and “Dow closes down nearly 400 points” and “Is this another 2008 for the stock market?”
There’s got to be a better option—something between buying lottery tickets like a fool, and investing in the stock market (which, depending on who you believe, may also make you a fool.)
I reached out to a bunch of self-made millionaires, financial gurus, and entrepreneurs to find out what they’d do with an extra $100.
Would they put it in the bank? Hide it under their mattress? Use it as seed money for a new business? Buy a bunch of canned goods in anticipation of the world economy’s collapse?
Or, who knows, maybe buy 50 lottery tickets?
Pay Your Damn Credit Card Bill
“The best return on any investment is one that’s guaranteed,” says Mark Cuban, the Shark Tank star and billionaire owner of the NBA’s Dallas Mavericks.
“If you have any credit card debt or any other debt, pay it down with your hundred dollars. You will have just earned the amount of interest you would have paid.”
If you’re one of those assholes who doesn’t have any credit card debt—wait, no, we don’t mean assholes. We mean “responsible people who pay their bills on time.”
If you’re one of those guys, you probably still have debt somewhere.
“Put the extra $100 toward paying off your mortgage for a guaranteed return equal to your mortgage interest rate,” says Teresa Ghilarducci, Ph.D, an economics professor at the New School for Social Research and a financial advisor for Hillary Clinton. “No mortgage? Pay off all other debt.”
If you don’t have any outstanding debt whatsoever—first of all, wow, who are you? Will you be our financial advisor?
With nothing else to pay off, Cuban suggests “putting it in the bank for a rainy day. Stuff breaks. This will help when it happens.”
Build Your Personal Library
Author Steve Siebold interviewed 1,200 self-made millionaires and billionaires for his book, How Rich People Think, and he found one thing in common among all of them.
They bought a lot of books.
Not the latest John Grisham or Tom Clancy. Fiction is for beach reads. The super-rich (or soon-to-be super rich) usually invest in “the acquisition of specialized knowledge,” says Siebold.
“Invest the $100 in your own self-education,” he continues. “Start building a library of personal and professional development books that will help you grow. Warren Buffet, Bill Gates and Richard Devos are all great examples of billionaires who built their empires using this strategy.”
Robert Kiyosaki—a businessman, investor, and founder of the Rich Dad Company, a private education company—wholeheartedly agrees with this approach.
“Our mind is our greatest assets,” he says. “Investing in yourself could be a subscription to a financial magazine or newspaper, a course or seminar, a book that will teach you more about asset classes and how to create passive income.”
Don’t know what “passive income” is? Neither do we! But there’s probably a book about it. Here’s one that looks good.
And after you buy it, you still have $90 for more books!
Give It Away
Remember that rumor going around for awhile that Mark Zuckerberg was giving away $4.5 Million to 1,000 random Facebook users? Yeah, that was bullshit. But giving away money isn’t the worst investment scheme.
Or so says Dave Ramsey, CEO of Ramsey Solutions and bestselling author of Total Money Makeover. “If I was looking to invest an extra hundred bucks, I’d invest in one of my team members,” he explains.
And not just by adding a few dollars to their paychecks. He’d do it in person.
“I’d take a little walk around the office, listen to someone on the phone serving a customer,” he says. “I wouldn’t even have to interrupt them. Maybe I’d just give them a hundred dollar handshake, smile and be on my way.”
Unprovoked kindness has a way of paying off in the long run. It can lead to helpful things like loyalty and trust, things that rarely come with a price-tag.
“People yearn for acceptance, approval, appreciation, attention, and affection,” Ramsey says. “That might be the best investment I make this week.”
Become a Lender
We’re not talking the kind of lender who breaks people’s knees when they don’t pay back their loan on time, or uses phrases like “you owe me five large and the juice is still running.”
It’s all done on the (relative) safety of the Internet
Duane Jackson is a former convicted druff trafficker who turned his life around to become a self-made millionaire and CEO of accounting software firm KashFlow. His best suggestion for that hundred bucks? Open an account on Funding Circle, a peer-to-peer lending service.
“I’d set it on autopilot, so it lent out $20 each to five different businesses,” he says. “As they made repayments on the loans, it would automatically lend it to more businesses so the money would grow and grow.”
Buy Some Silver Coins
This suggestion made us briefly wonder if Robert Kiyosaki—who’s co-written a book on investing with Donald Trump—is secretly an obsessive Game Of Thrones fan.
“I might put that $100 to work for me by buying a few silver coins,” he says, without a trace of irony.
Really? No. Seriously?
Other than preparing for the inevitable collapse of modern society, in which we all go back to bartering with precious metals, why would somebody do that?
Kiyosaki calls it “a small and simple investment that should heighten awareness about markets, commodities, and the way silver plays a role in our lives.”
Silver, he adds, “is used in cell phones and medical devices and computers. It’s a part of our daily lives, and there’s a finite supply of it.”
The first step, Kiyosaki says, is finding a local coin dealer. “He or she will explain ‘spot price’ and other basics related to purchasing precious metals and coins.”
The next step, according to us, is filling your bathtub with coins, and then giving yourself a money bath, Scrooge McDuck-style.
Don’t Do a Damn Thing With It
Mark Spitznagel is the hedge fund manager for Universa Investments, and the author of investing bible The Dao of Capital. And full disclosure, he’s also my brother. I remember him from before he had enough cash in his wallet to buy a helicopter.
Up until a little while ago, he and his family lived in a five-bedroom French villa in Bel-Air that he’d bought from Jennifer Lopez. The place was surrounded by a moat. A moat!
He lived in a house designed to fend off Spanish conquistadors. Now he lives on a property with a hedge maze so large, you can see it from space.
Which is to say, he has some monies. Many, many monies. I was particularly interested in what he’d suggest doing with an extra C-note.
“I say do precisely nothing with it,” he says.
Oh for fuck’s sake! I assume, of course, that he’s messing with me, as he’s been known to do. But he assures me it’s sound advice.
“This is contrary to how you’re supposed to act in this age of central bank manipulated zero interest rates deceiving us into myopically jumping into every risky asset we can find,” he continues. “And this is precisely why I say do nothing. It’s a trap!”
If you imagined him saying that last line exactly like Admiral Ackbar in Star Wars, you would be correct.
Spitznagel’s not going so far as to say you should hide your money under a mattress, but he does think you should have plenty of “dry powder,” which is fancy investor speak for “cold-hard cash.”
“Keep your powder dry for the day that everything—and I mean everything—will get much, much cheaper,” he says. “Like generational investment opportunity cheaper. Dry powder today will provide for the great investments to come tomorrow.”
Just out of curiosity, I ask if he’s bought any Powerball tickets.
“Nope,” Mark tells me. “That’s a negative expectation bet.”
“Come on,” I needle him. “You wouldn’t spend a measly two bucks for the chance at 700 million? Even back when you were living paycheck to paycheck?”
“I haven’t,” he insists. “I believe that sometimes, very rare, they can actually have positive expected value when the pot gets large enough. But in general, I say don’t gamble.”
I’m not made of stone. I’m buying a damn Powerball ticket. A $2 investment, which I’m well aware is about as smart as throwing cash out of a speeding car window.
But the other $98? I guess I’m keeping my powder dry.
(This story originally appeared, in a slightly different form, in Men’s Health.)