If you have $5000 lazy cash in your hand, then the next question comes to your mind is “How to invest 5000 dollars wisely?. This is because investing in anything requires a lot of forethought and many people usually don’t have ready-made investment plans. The answer to this question is quite easy once you get a chance to think about it. Below are some creative ideas on what to do with 5000 dollars.
Top Ten Wise Ideas on How to Invest 5000 Dollars
1.Get rid of credit card debt
Credit cards are extremely valuable to have but they all come with attached costs. Very many people have outstanding credit card debts and they still continue to increase this debt by using the credit cards to make payments. Many people pay hundreds of dollars each year as interest to credit card companies. These are the people with average interest rates and high interest rates could drive this figure to thousands of dollars per year. Using 5000 dollars to repay credit card debt can reduce the total amount of interest for credit card debt by thousands of dollars.
2.Invest in education
According to a study conducted on the cost of education, the past 20 years have seen college fees increase by 130%. Investing 5000 dollars to pay college tuition is a great idea as it will reduce your financial burden. An even better idea is to put the money in an interest earning account for future use. One ways in which this money can be used is to educate children several years to come. The cost of college education 16 years from now will be $95,000. This is for state colleges and in private colleges it might be as much as $340,000. A 5000-dollar investment now will increase substantially after a decade.
Another idea on how to best invest 5000 dollars is to buy high quality stocks on the stock market. High quality stocks are a relatively safe investment and they can easily be held for a long time. Dividend payout for such stocks is high and the value of the stocks increases over time. You should not put all your eggs in one basket so it is advisable to pick several of the best stocks. You can get ideas by looking at sources that track the entire stock market such as an exchange traded fund. Statistics show that stocks have had an average return of 10% over the past 50 years.
The forex exchange market is one of the most traded markets in the world. Billions of dollars are invested every day and investors make substantial profits from trading with currencies. The best way to invest 5000 in this market is to buy currencies that are cheap and sell them when they become expensive. Extensive research should be done and you should always have updated information. The forex market could double 5000 dollars faster than almost all other investments but you should remember that the money can also get lost just as easily. The good thing about forex trading is that it allows you to trade round the clock
5.Putting it in a savings account
This is one of the safest investments you can make with 5000 dollars. Savings accounts have a 1.5% interest rate and this is among the lowest you can get. Although it is very safe, it would take almost half a century for your money to double. Although you would have double the money within this period, the value of the money would have reduced significantly therefore making this investment a poor one. Interest paid on money put into savings accounts is barely enough to offset the money’s loss of value. Putting money in a savings account is therefore not a good way to invest if you want to make a profit.
6.Exchange Traded Funds (ETFs)
An Exchange Traded Fund comprises several different investments packaged as a single product. When you buy into an ETF, you will pay low fees and have a consistent return on your investment. An ETF can pay dividends upwards of 7% and it is quite safe because there is a diverse portfolio of investments in the fund. When some investments fail to make money, the remaining investments cater for the difference. These funds are very safe to invest in and only economic catastrophes of immense proportion could make the funds to collapse.
7.Start a business
Most of the investments mentioned above require little or no personal involvement and you are free to do anything else with your time. If you are feeling a little more enterprising, you can start a business of your own. If you are wondering how to invest 5000 dollars, a small business that is service oriented should be a good start. Businesses that involve physical commodities usually require much more money to start. You should consider how much of your time the business will require before deciding to invest in it.
8.Buy certificates of deposit
Certificates of deposit are usually known as CD’s. They represent a form of time-restricted deposits where you are not allowed to withdraw your money before a certain period elapses. If you hear a person saying, “I have 5000 dollars to invest”, you should probably tell him to invest in something else if he wants to be able to withdraw the money in a hurry. Certificates of deposits can only be cashed in after several years, usually five years. They have a fairly good return on investment and you could double your money in about 25 years.
A commodity represents anything that can be bought and sold later for a profit. It can be bought for many reasons with the most common one being speculation. Commodities include items such as precious metals and precious stones. These can be bought cheaply in times of excessive supply and sold for substantial amounts of profit when there is excessive demand. Apart from precious metals and stones, you can invest in many other commodities such as clothing items, electronics, and foodstuffs just to mention a few.
10.Buying collectors’ items
There are probably thousands of collectors’ items and for 5000 dollars you can buy substantial quantities of some of them. Some common collectors’ items include: coins, stamps, baseball cards, and comic books. Depending on your hobby, you can choose from a wide range of collectibles and add them to your collection. In a few years they could be worth a lot more money and you could make substantial profits when you decide to sell them.
Investing is a smart move for any person as long as he or she acknowledges the dangers associated with investments. When you invest money in something, you can get a lot of profit from your investment or you can potentially lose the money. If you are a careful investor and only put your money into reliable investments, there is every possibility that your money will increase over time.Even if you are new to the investment scene, 5000 dollars is an adequate amount to train you about ways in which you can multiply your money. There are many resources available for new investors such as books and the Internet. Friends can also help you to figure out how to invest 5000 dollars.