Investing Half my Annual Salary before my First Paycheck

For simplicity, let’s say my annual salary is $50,000 and, before January, 2017’s paycheck came, $25,000 of that salary has already been invested.

This is what a $250,000 credit line looks like:

Pictured above are dozens of credit/debit cards I have opened over the last few years (about 20 of them are active with an average of over $10k limit per line – so really, my $250K line looks like 2 of those 5 rows).

This is what $100,000 dollars looks like:

Pictured above are hundreds of Visa Gift Cards (210 to be exact) that have been loaded with between $300 and $500.

What does this have to do with investing?

I will tell you.

In the About post, I talked about investing interest free federal student loans. Six months after graduation, I did not take my ~$2k profit and call it good. Instead, I continued to invest interest free money in the form of 0% APR credit card sign up offers and 0% APR with 0-2% fee balance transfers.

Before you read more details about investing lines of credit, know that is one of, if not the, riskiest venture I am currently involved in. Investing lines of credit involves managing numerous credit accounts, that all need to be paid monthly, and completely paid off before the promotional APR period expires. Short-term investing, and long term for that matter, is not a guaranteed return. Money could be lost on the investments at the time of the 0% APR expiring and those lines of credit still need to be payed off.

Along with all posts on this site, this is solely for entertainment purposes and not to be taken as financial advise.

2015 and 2016 Investing Strategy and Results

Actually this started in June, 2014 when my first round of credit card signups took place.

2014/2015

I was fresh off of the return on student loans and had opened six cards within a couple months. My total credit line at this time was roughly $50k. 3 of the cards opened for signup bonuses had 0% APR promotions attached to them. Somewhere between 12 and 18 months 0% APR each for the Amex Blue Cash Preferred, Amex Everyday, and Chase Freedom cards.

As mentioned in the Credit Score post, keeping credit utilization below 10% of total revolving credit is crucial to maintaining a high credit score. This means for 2014/2015, I could only invest a maximum of $5K (10% of 50k).

How is a line of credit converted into investing?

You can’t open a Vanguard account and invest in their total stock market index fund with a credit card. Instead, you have to buy cash equivalents (Visa Gift Cards) and then deposit those into a bank account (at this point I was using an American Express Serve bank account) and then invest in the fund.

Late fall of 2014 I bought just under $5K worth of $500 visa gift cards from Walmart and Albertson’s. Actually, I bought a lot more than that and I had loaded a few thousand directly into Serve with a credit card and received an average of 3% cash back on the cards. I used $5,000 to invest in this Vanguard fund with a $3K minimum deposit. The other thousands of dollars was cycled and payed off monthly to generate credit card rewards and cash back.

When I deposited my ~$5K the Vanguard stock was worth ~$19K a share (I had about a fourth of a share) and when my promo APR expired in late 2015 the stock was coming down off a peak and I ended up leaving most of  it in at ~$19,100/share.

I made ~$30. Which is nothing but this was a very short term investment in a long term account and it was more of a test.

2016

First quarter of 2016 I had more credit cards with 0% promotional APR and I had received multiple offers for 0% APR with 0-1% fee balance transfers. My credit line was over $100K and the investment company Wealth Front had been introduced to me. On the downside, my American Express Serve account was shutdown with thousands of others.

Wealth Front is an investment account with no fees on up to $15K+ in investments and then a small percentage fee after that.

Along with my ~$5k left in the Vanguard account from the prior years credit lines and return on student loans, I had ~$10K to invest in this new account that is much more diversified and managed:

  • CapitalOne QuickSilver – $7K from 0% APR promotion
  • Barclaycard Arrival+ – $3K from 1% fee balance transfer (-$30 to start it off)

I took all of my money out of the Vanguard account, early 2016, when it was at ~$19,500/share (ultimately I made about $100 off of that). This was added to the ~$10K from credit lines and I put it into Wealth Front the just after first quarter of 2016 ($14K).

2017/Now

2016 was a pretty good year for investing (in my diversified Wealth Front account at least) and so far so good in 2017.

I left all of my investments from last year in my Wealth Front account which ended up going from ~$14K to ~$16K today (13% gain)!

I paid off the remainder of those credit lines with new 0% credit card/balance transfer promos and added an additional $10K to that:

  • CapitalOne Venture – $8K from 1% fee balance transfer (-$80 to start it off)
  • Chase Sapphire Preferred – $8K from 1% fee balance transfer (-$80 to start it off)
  • Citi Double Cash – $8K from 0% promotional APR

My total revolving credit limit is now ~$250K and I have ~$24K charged over 3 cards at all times (keeping it under 10% utilization with a little wiggle room).

I have ~$20K invested in Wealth Front and ~$5k sitting in random bank accounts I opened for bonuses.

~$24,000, [half], of 2017’s ~$50,000 salary already invested and making money for me. Let’s hope this year is as good as last for a nice $3K ROI.

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