I often get asked how to stockpile or consume good businesses in this market if you have $1000 or $3000 to invest. Let's start by reviewing the difference between trading a stock and stockpiling a business for someone with very little money.
Trading a stock using tools requires very little capital. Read Rule #1, check out my free investing calculators and go to it. You can certainly do it with $1000, although with that small amount to invest you'll incur trading costs that chew up a lot of your profits.
As of 2025, the rise of low-commission brokerages and fractional share investing means you can now start with even less capital. Apps like Fidelity, Schwab, and M1 Finance let investors buy slices of high-quality businesses for as little as $5. This reduces the barrier to entry while still allowing Rule #1 investors to practice careful selection based on value and predictability.
The problem with trading in this market, as some people learned in 2008, is that when you are trading against the trend you keep getting in just as the stock price turns and drops. An unrelenting down trend will cause you to have many slightly losing trades - I call it "the death of a thousand cuts" in Rule #1.
Trading in a market like this can be deadly depending on whether you are correctly determining the overall trend of your target stock.
That’s why it’s critical to understand the Four Ms — Meaning, Moat, Management, and Margin of Safety. If the business checks all four boxes, and the price drops further, that may actually present an even better buying opportunity — assuming you’ve done your homework. This is how Rule #1 investors remain calm when the market panics.
In my book, PAYBACK TIME, I show you how to find the points in time when the trend is changing. It will help you trade better.
And stockpiling stocks? PAYBACK TIME teaches how to stockpile, to consume. We very rarely get an opportunity to simply load up the truck and forget about it. No trading required. We are in one of those opportunities right now. Market volatility in recent years — including the COVID-19 crash of 2020 and the inflation-fueled selloffs of 2022–2023 — has reminded us that buying when others are fearful still works. But this only applies if you’ve identified a wonderful business and are buying it at a smart price.
You can look at companies like Apple, Costco, or even Berkshire Hathaway — businesses with strong moats, excellent leadership, and long histories of consistent performance. These are the kinds of businesses that Warren Buffett has been happy to stockpile when prices are favorable.
But stockpiling takes some kind of cash flow and that's the rub for those who may only have a little to start with. What to do if you don't have any?
When I started investing in 1980, it just happened to be the bottom of a really bad market that had been bad for 15 years - ever since 1965. We were starting to experience massive interest rates - the 30 year Treasury Bond eventually got priced at 14% or so. The Dow was at 750 after peaking in 1965 at 1000. That's a 15 year loss of 25%.
No one thought you could make money in stocks, and in a few years everyone who was all about "no money down" real estate was out of the business. And guess what? It was the absolute best opportunity to invest in either one.
And there I was with this amazing opportunity and zip to invest.
So what to do?
Well, you do the only thing that makes sense. You work hard. You work extra. You look for something to do that will put more cash in your hands.
Launch a side hustle using your existing skills — tutoring, copywriting, design, or online coaching.
Offer gig services through Upwork, Fiverr, or TaskRabbit to generate incremental income.
Use cash-back apps or reward credit cards (paid off monthly!) to redirect everyday spending toward your investment account.
Automate saving using tools like Qapital, which rounds up spare change into an investment fund.
You cut expenses. You do what you have to to take advantage of your situation.
You become like a guerilla fighter who makes use of every opportunity and squanders nothing. You move in with mom and dad. You share an apartment with a like-minded investor. You quit playing the game of keeping up with the Joneses. You sell the new car and buy a cheap one. You shop at Salvation Army. You tell your family the facts of life. If it's a problem for them to not be wearing $100 jeans and sneakers, you move to place where families and children have better values. Try Iowa or Idaho. YOU DO WHAT YOU HAVE TO DO to load up your investing account.
In today’s culture of instant gratification and social media comparison, living frugally can feel isolating. But keep in mind: financial independence is the ultimate rebellion against a system that wants you in debt and distracted. Use your money to buy freedom, not status.
If you are in a house with an upside down mortgage, go to the bank and ask to swap your house for a smaller one they have foreclosed on. They do that sort of thing. They end up with one foreclosure instead of two and you have a house you can afford. The point is you get out and get doing stuff. Something. Anything.
But here's what you do first: You decide where you want to be financially in 5 years. You make yourself a promise that you'll get there, come hell or high water. You put that promise on a card and put it in your pocket and you look at it every day. You keep that promise at the forefront of your thinking. You push out every thought that says anything but YES to that promise.
For example, your goal might be: “Grow my investment account to $25,000 within five years.” Reverse-engineer that goal. If you can save $350/month, and earn 10–15% annually using Rule #1 strategies, you’re on track. Use a compound interest calculator to map this out visually.
So, you do what you can and you save every penny, because what you invest now will pay off 1000:1 in twenty years.
Now go play.
Phil Town
**Editor’s Note (Updated April 2025): This article was originally published in 2009 and has been significantly updated in 2025 to reflect current examples and Rule #1 investing insights.
Related Posts from the Rule 1 Investing:
How to Invest Money: A Simple Guide to Grow Your Wealth
Best Way to Invest On a Budget: Small Investment Ideas for $500 to $10,000
Market Capitalization: Why Price Doesn’t Always Equal Value
The Rule of 72: How to Double Your Money Every 7 Years With Compound Interest
