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How To Invest $5000 Dollars

how to invest $5000 dollars

Learn how to grow your wealth, even if you only have $5,000 to invest

Do You Know How to Invest $5,000? If not, you’ve come to the right spot. In this short blog post we’ll look at the best way to invest $5,000, and a couple of other important things you need to know about building wealth. And on that note…

Congratulations on saving $5,000! Sure, it’s not a life-changing amount of money or anything. But it’s still impressive you’ve made it a priority to consistently put your money aside. And now you get to share in the benefits. So read this blog post about how to invest $5,000 and learn how you can put your earnings to work for you. It’s an exciting experience. But let’s not get ahead of ourselves.

The Boring Truth: How To Invest $5,000 Dollars:

The best way to know how to invest $5,000 is to experiment and try it yourself. But while some people will try penny stock services and other will read investment books, most folks should just accept the boring truth: Indexing your stocks works pretty well. That means…

You can buy an ETF like the SPY or a low cost indexed mutual fund. These financial products give you access to a tiny sliver of all the stocks in a big index. This is a good way to diversify, avoid financial advisor fees, and build your wealth over time. So here’s what you should keep in mind…

Even though it’s boring to index $5,000, getting 70% returns each year shouldn’t be your focus when you’re learning how to invest $5,000. I know this might sound crazy to you. But hear me out: There’s something much more important than earning high returns when you’re trying to invest $5,000.

The Cold Truth About Investing $5,000 Dollars:

I realize it might have taken you a few months, or even a few years to save up $5,000. And I’m really sorry to have to tell you this… but, $5,000 is just not that much money. It’s getting there. It’s much better than having only $1,000 to invest. But here’s the key factor to keep in mind:

Getting 20% returns of $5,000 gets you $1,000. When you’re starting out building wealth for your lifetime you need to make sure that you are saving as much money as possible. Compound interest, dividends and capital gains all work better when you have more of an asset base to leverage. So while it is really really really great you’re interested in learning how to invest $5,000, the bottom line is that you don’t want to lose what you have. Invest it safely and focus on growing your income.

The reason is…

If you’ve saved $5,000 then it’s pretty easy to save $5,000 again. And since you would need to get a 100% return in investing, chances are you’re better off to earn the next $5,000.  Now when you start to get $15,000, $20,000 or $30,000 dollars your small percentage returns can have a material absolute impact. Do you follow what I’m saying? It’s important to understand growing your capital base and building assets at this stage is even more important than getting good investment returns. But I hear you…

You have $5,000 to invest today and you want to know what to do with it. So, here’s my best advice for investing $5,000…

How To Invest $5,000 Dollars – My Best Advice:

If you need to know how to invest $5,000 dollars and you don’t have an interest in the stock market then you should index your money in a low cost mutual fund. That’s pretty standard advice. You can learn more about it by reading a short book like the MoneySense Guide to the Perfect Portfolio and then never worry again. But…

If you are passionately interested in the stock market my best advice would be to index half or three quarters of your $5,000 (remember, you don’t want to blow all your savings). And then you can go ahead and invest the rest in your own ideas. Get used to buying stock and working with limit order. Study your craft, read lots of investing books and maybe even open a stock simulation game to improve your edge. You can also trade with eToro to get a piece of the action without much money. But only use a portion of your money this way. The bottom line is…

Learning how to invest $5,000 can help you lay the foundation for a very rich life. And that’s the way you should look at it too. Learning how to invest $5,000 dollars is just the beginning of your wealth building journey. So pick the route that works for you and keep investing a bit of your money each month. Make sense?

And By The Way: If you’re looking for more exclusive stock ideas and analysis you’re welcome to sign up using the form below. You’ll get more information on my approach to stock picking and other valuable resources.