- Posted June 30, 2012 by
Ways to invest $ 5 K
In this economy, $ 5,000 can feel how much more money than they were a few years. There are many ways you find yourself with an extra $ 5,000: a bonus at work, inheritance, an additional contract job that you did not expect, or a tax refund. Maybe you have it now or you are expecting it soon, but regardless of the timeframe that you expect to do with the money? Here are a few ideas that may help from Personal Financial and Investment Consultant Irakli Berdzenadze:
Pay off Credit Cards
If your household has credit card debt, you have, on average, $15,956 worth. Almost one third of that debt could be wiped out with that $5,000. If your credit card interest rate is average, you are paying 13% ,or $650 each year, to hold that balance. That $5,000 could reduce the interest you're building up by $54 a month. How long was it going to take you to save $5,000 for the sole purpose of paying your credit card debt? If it was two years, you just saved $1,300 making the return on your $5,000 - 26% over two years or 13% per year. Any investor would be very happy with that figure. Although it's not necessarily fun, the best return you'll get on your money is to service your debt.
An ETF is a basket of investment products packaged into one fund. They often come with low fees, yet offer the safety of a diverse portfolio. Some of these ETFs hold bonds, which are historically safer than stocks. Some bond ETFs have dividends of 7% or more and, barring any large investment market event, those dividends are quite safe, because of the hundreds or even thousands of bonds held in these funds. If you choose to invest in Bond ETFs, you may need to ask for help from a trust financial adviser.
Start a Small Business
If your debts are paid, you don't have children or you're well on your way to having your kids' college education paid for, consider starting a small business. To get your business off of the ground, $5,000 may not go very far, but some service-type businesses have very little startup costs. Before committing the money to a small business, make sure to carefully weigh the time and financial commitment that will come with this type of endeavor.