Index funds are great, but they aren’t the only way to make money grow

If you spend a lot of time in the Money topic on Medium, or reading personal finance advice on the internet in general, you’re already likely well acquainted with the golden child that is the index fund. Throw your money in (ideally in a tax-advantaged account), let someone else replicate the entire stock market, eventually retire with significantly more money that magically appeared.

This is not an article seeking to shame index funds, or traditional vehicles for building wealth. I use index funds, and I very much enjoy watching those accounts grow without the need for me to do something on a day to day.

My personal philosophy when it comes to personal finance however, is that sometimes you need to think a bit outside the box. This doesn’t mean always taking huge risks with your portfolio, but it does mean looking at the idea of investing in broader terms.

For an example, let’s literally grow some money

Seeds have one of the absolute highest ROIs I have ever seen when you really break down the math, and I’m not talking about cannabis.

While you may think of hard manual labour on a farm as the only alternative, hear me out for a minute, because indoor plants can be pretty darn lucrative.

A package of fancy heirloom seeds generally costs about $3. Let’s assume 80% of them will actually sprout because I’ve purchased them from a decent company but I am not a perfect gardener. The amount of seeds in a package varies greatly dependant on the plant and supplier, so in this example I’m going to use Genovese Basil from West Coast Seeds, which contains approximately 500 seeds according to their website information. Basil is an excellent plant for containers indoors, and is very beginner friendly.

500 seeds x 0.8 germination rate = 400 potential basil plants

We do have some additional costs, because seeds need a few other inputs to grow, and depending on season and your own living space, you may need some additional lighting. Let’s assume we’ll be selling our little basil plants in simple plastic pots via Facebook Marketplace, because our customers can pick up from us easily, and we don’t need to advertise. This is intended to be a low-effort experiment after all.

Large bag of potting soil ($15) + 100 Plastic nursery pots ($25) + Budget LED lighting ($120 + increased electric bill $25/month) + timer for lights ($12) = $200 including seeds for our first 100 plants.

So we spend an afternoon setting up our little growing space (I use a cheap wire shelving unit, but you can put stuff anywhere you can hang your light source, I just find shelves the most effective for my home), and we patiently wait for the emergence of our first sprouts. After a few weeks of light and water, we have nice little basil plants several inches high that can easily be sold for about $5 each, netting us $500. This means we’ve already scored a 150% ROI in about a month.

But wait, our lights still work, and we still have seeds (maybe even a bit of potting soil). So we decide to do another batch. Suddenly compounding kicks in, and our numbers get really gorgeous. This time our math looks even better.

Large bag of potting soil ($15) + 100 pots ($25) + increased electric bill ($25) = $65 for another 100 plants, assuming again that we sell them for a total of $500, we now have an ROI of nearly 670%.

I challenge you to find me a stock that shows returns that high.

Realistically, our little basil business also does have a definite ceiling based on the space we have available, our own time for watering, and how many people locally would like to buy herbs for their kitchen. My point here is not that we should all immediately start selling basil, but that when you look at an index fund as the only successful option to build wealth, you may be missing other opportunities in the market.

Sit down, do a little math, and take the occasional calculated risk.

1 part girl boss, 1 part designer, 1 part writer, and 1 part depressed potato.

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