July 14, 2022

The Plug Investing with 5000 dollars

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How should I Invest $5000 of my Disposable Income

You have some money saved up and are unsure where to invest it. You are not alone as today we are looking down as the stock market continues to decline and up at housing prices. The challenge is, do you know where the market is going? Yes, the Dow Jones Industrial Average, NASDAQ, and S&P 500 are all down but are we at the bottom or still expected to continue moving down.

Maybe you should consider real estate as an investment. Buying and renting houses are a good investment. Many of the world’s millionaires are real estate investors. But how many homes can you purchase with $5,000? In most markets across the United States, we’re seeing the highest home prices on record. $5,000 won’t get you much other than maybe paying for the insurance or the closing costs.

Yes, today’s 5,000 dollars doesn’t get you a lot, but you worked hard for that money and would like to keep your initial investment.

The idea behind this article is that you are already fully divested in your employer 401K and your individual Roth IRA for the year. We strongly suggest that you invest in these two sources first as they are the best avenue for retirement. Keep in mind that when you retire or move jobs you have an opportunity to move your employer’s 401K to a Self-Directed IRA and with that option, you open up a whole new investment vehicle. 

Invest In Yourself:

The first place you should consider investing that $5,000 is in yourself. Could you take some classes or learn a new trade that could help you take that $5,000 and turn it into $50,000 or more.

I went back to school in my 40s because I learned that I needed a degree to get a job I was interested in. Not that the job couldn’t be done without a degree, just that no company would consider me without a finance degree. So, I spent $10,000 to finish my degree and in the first year, I increased my income by 40%, or about $30,000. The second year after the degree I was getting offers from a variety of businesses looking for someone with my work history, real estate knowledge, and degree.

Yes, sometimes investing in yourself is the best option, and if you only have $5,000, start by looking inward and consider yourself as an investment option.

Invest In Stock Market:

If the $5,000 is your only savings, make sure you have reserves to pay any bills or costs that may come up in the next year. Once you have that secured now consider investing the money in the market.

Even in today’s rocky market, there are businesses you could invest in. I look for companies that have a long track record of paying their investors. Buy stocks that pay dividends, and with that, you will be diversifying your portfolio. Your initial investment may go up or it may go down, but you have a strong company backing those shares and with the income dividends you will be being paid based on your shares and not the value of the shares.

Another option is mutual funds as these are “funds” that own shares in several different businesses. This diversification can help when a segment of the market may be down while another is up. The manager of these funds is expected to keep you making money over the longer term. Mutual funds are seen as a longer-term investment, and you shouldn’t look at the value daily or monthly. The return is based on 12, 24, 48, 60 months, or even longer periods.

There are such a vast number of mutual funds it’s difficult to venture into a discussion of whether you should be looking for growth, stability, bonds, or some hybrid mutual fund. You have so many options you need to consider your current position, age, expected income, and retirement age. I suggest you consult an investment advisor to choose a good option for your $5,000 investment if you choose this option.

Invest in Bonds:

If you are later in your investment life you should consider investing that $5,000 in bonds. If you understand the dividend of stock investing, you surely understand the idea behind investing in bonds. With a bond, you purchase a piece of paper that says, for your investment, you will get a stream of income paid out typically twice per year. For someone looking for income, this is a great investment. But how much income would a $5,000 investment provide? Well, pennies on the dollar and your return will be limited, but your money will be secure.

Bonds provide safety in your investment, typically backed by a corporation, municipality, or treasury they are paid out over time. Bonds provide income if you’re looking for more income bonds are a great investment.

Bonds are a great investment diversification option. You should have little concern over the loss of initial investment and you definitely can get some income while owning the bond.

Invest in Gold or Silver:

Diversification is key to the longevity of your money in the market. You can diversify your investment dollars by using the stock or bond markets, you can diversify by purchasing or starting a business, you can diversify by becoming the next millionaire through real estate investments, or you can diversify your portfolio by investing in Physical Gold and Silver Coins or Bars.

New to investing in physical precious metals? Check out this article on “The Beginners Guide to Investing in Physical Gold” where we lay out 12 physical gold investment topics to help those just starting out. 

We’re sure of two things regarding precious metals as an investment. First, gold and silver are depleting assets. Yes, we know they are both mined and used for many purposes. But gold and silver, as an asset, is being exhausted. So, to own gold and silver, in coin or bar format, is an asset that is physical, and no matter what happens you have that physical asset to sell in the future.  Second, precious metals can hedge against inflation. As the cost to mine gold or silver increases so too does the value of the asset. If inflation is low the value of the asset is low, when it goes up the value goes up.

How has Gold been as an investment for the past 30 years? Investopedia says from 1990 to 2020 the price of gold increased by around 360%. Okay, I know what you’re going to say the S&P 500 increased nearly 1000% in that same period. But as an investment would you rather have a physical item or a piece of paper? Would you be satisfied with Gold or Silver as an investment that increased 360% while your 401K and Roth IRA were making the 1000% return?

With your $5,000 we believe that Precious Metals are great investment especially to diversify or hedge against inflation. Gold, unlike stock dividends or bonds, is not an income-producing asset. You are securing your future based on the appreciation of gold while you hold the asset.

How to Invest in Gold or Silver with my $5,000?

You invest through companies that own or can purchase coins as an investment and securely ship them to your home. Once you have them in your possession you can put them in a safe place. Check out the article on “What Precious Metals Company is Best if I only have $10,000 to Invest?” we give the reader our Top 3 Best Choices and several others they can check out. 

If you choose to invest in precious metals in a Self-Directed IRA you cannot hold the coins personally, they are stored in a secure facility for safekeeping and once you decide to start taking your investment at 591/2 years of age, you can choose to take the coins or cash them out at that time and take the cash.

How do I sell my Gold or Silver Coins?

Many businesses are available for you to sell your coins. You can even sell them to others as an investment.

Investing my $5,000 – How and Where?

Yes, you’re doing your due diligence to decide the best place to invest your money. It is so hard to decide what is the best route to take. Consider an investment strategy that you can stick to for your entire investment life. Don’t just throw money at an opportunity if you are not sure about the return. Make sure you have all the information to make a sound decision.

Diversify, yes make good choices but consider investing as a more secure option. Gold and Silver Coins are a favorable asset class that can give you the returns that will make your retirement enriching. Check out our Top 5 precious metals investment companies to get a better understanding of this investment option.


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