You have 5000 dollars you want to double? Are you looking for the best kind of investment, which will surely pay off in the long run? If that is the case, stay with us through this article, we will give you the best six solutions for the question of doubling 5000 dollars.
6 Ideas and Best ways for how to invest $5,000
When you have some money you want to invest, there are a couple of questions that pop up – Where? When? How? And there isn’t a simple, unified answer to these questions. It all depends on what you are comfortable with and what your vision is.
It is your money we are talking about, after all. We hope to help you look through some of the best ways to invest and give you some nice follow-up sites that will get you what you want, the fastest way possible. So, stick with us and let us propose some of the best ways to double 5000 dollars.
Invest in 401(k) or IRA
One of the safest ways to double 5000 dollars is surely the 401(k) plan. The traditional 401(k) is sponsored by your employers, and you go as a contributor to your retirement funds. A certain portion of what you earn is automatically transferred from your paycheck to the funds you choose. That money isn’t taxed until you decide that you want to use them.
If you want more in-depth info about this type of saving, I would recommend visiting the IRS page for the 401(k) plan. The Roth 401(k) is similar to the traditional one, but you contribute with previously-taxed portions, and in the long run, when you want to withdraw them, they are already taxed.
If your employers don’t offer any 401(k) plans, then you could go with an IRA, short for Individual Retirement Account. With it, you get advice from a broker or a bank and can transfer funds to your IRA up to $6.000 annually, funds that will be available without taxation after you have 59 years of age.
If you do want to get them earlier, and you are not eligible for an exception, they will tax them. On this government website about investments, you can find some more info about IR accounts and some really helpful links to get you started.
Going by the 401(k) plan is the easiest, risk-free way of doubling your savings. If your employer doesn’t match your 401(k) contributions, then you still have an IRA you could go to. If you’re looking at a slow but safe way to handle your money, these are the things you look for.
Get Into The Stock Market Or Let Robo-Advisors Work For You
Investing in the stock market can be a great start off for collecting savings in the long run. You could do it by yourself, with some reading, learning, thinking, and sensing. Or, you could leave it out to a professional that will be in charge of the investments and will consult you when needed. Once you made up your mind on this matter, hop onto opening an account.
This part of our article is closely related to our next section, Mutual Funds and ETF’s since a lot of brokerage companies offer you a way to invest in a set of stocks and be more secure that you won’t lose all of your investment with only one bad purchase. But, if you are sure that some specific company is on the rise and will be a big-time earner in the future, then you really should trust your gut feeling and get some share from it.
Investing and doubling 5000 dollars is not really hard, as long as you learn the basics and keep up with the trends. Some of the most frequently given advice to new investors are simple – Get a professional to help you start and don’t obsess with your stock shares.
Invest, check your portfolio monthly to make sure that everything is going right, but don’t open it up three times a day. If you are a beginner investor, better start off with Mutual Funds and keep the shares you buy. I know that is not really the point of being a stock trader, but until you get your mind around the stock market, play it safe.
If nonetheless, with long-term investments like these, you’ll get to the trading part eventually.
If you do decide to do it by yourself, know that it will be time and energy-consuming. You need to do a little bit of research, a little bit of learning, a little bit of asking advice from experienced stockholders, and whatnot. But, in the end, if you are confident and like to have things in control, this risky job might give you peace of mind that at least it all depends on your choices.
There is a solution even for the ones out there that don’t have any finance background and don’t really have the time and energy to become stock market investors. You could go in the middle – make yourself an account and hire a robo-advisor to help you out.
Robo-advisors are software products that calculate the best place to invest your money, based on what you tell them about your goals on the online questionnaire. They are the middle way between financial advisors, who are more expensive, and you are doing the entire job by yourself and risking a few bad moves.
The biggest advantage of robo-advisors is that they work for much lower compensation fees, and most of the companies that own them aren’t looking for a minimum or maximum starting sum.
If you decide to consult a robot, you need to start off by giving some basic info about the funds you have available, to what extent you are comfortable with risk, and what is the time frame for gains.
But, have in mind that there are some aspects that robots can’t do – they can do some basic financial planning based on your portfolio, but don’t have the human factor of input, moral choices, preference, predictions, and so on.
If you aren’t sure if financial advisors or robo-advisors are better for handling your investments, you could take a look at this site. They neatly explain which is better for what, make an in-depth comparison, and offer online sites that will take care of your 5000 dollars.
As times change and a lot of investors like the middle way, there are a couple of online-based companies that have robo-advisors who work with the help of real person financial advisors and their experience.
Double 5000 Dollars By Investing In Mutual Funds Or Exchange Traded Funds (ETF’s)
Mutual Funds and ETF’s are two ways in which you could double 5000 dollars. These are more or less long term investments, but once you find your way around them and get some investing experience, you could be earning quite a lot, depending on your investment amounts.
Both of these funds have similarities, as well as differences, and knowing what you’re in for could make a huge impact on future earnings.
For one, they both offer sets of assets and are a nice way for diversity in investing. Plus, they are quite less risky compared to individuals investing in stocks or shares since you invest in diverse sets of stocks, so if one doesn’t pay off, another might compensate.
Furthermore, you can choose where you invest, depending on personal goals, investing style, and comfort with risk-taking. Lastly, both of these types of investing are managed and helped by professional portfolio managers and consultants, which saves you effort and time and gives you more security.
The main difference between Mutual Funds and Exchange Traded Funds is in the management policy. With Mutual Funds, the management is active – the fund manager decides how and when to allocate assets and does that only at the end of the day, based on a calculated net asset value. ETFs are traded like stocks, and you could buy or sell at any time, but the management is passive and made based on a particular market index.
Compared on the basis of minimum and maximum investment requirement, Mutual funds usually have a higher minimum, but those too are subjected to particular fund policy, and with 5000 dollars at your hands, you do have the minimum amount you need for almost all of them.
Because of these differences, the fees and costs for updating your portfolio also vary. Mutual funds, with their active management, compensate for time, effort, and mental work and thus are more expensive.
If you do decide on one of these options, I highly recommend advising with some expert fund manager or an experienced investor. When it comes to that sum of money, you better be safe than sorry.
Pay Out Your Debts
Even though this is not the first idea you get when you want to double 5000 dollars, paying student loan debts or any other kind of debt could be really liberating. This might feel like you’re, investing money on money you already spent, but hear me out.
The interest rate you pay every month in the long term is money you lose, right? If you pay your debt as soon as possible, get a piggy-bank and start putting the same sum you would be otherwise paying on interest. In no time, you would need a new piggy-bank. Those might not be money earned since you already made them by working, but they are money saved.
Don’t trust me? Let’s do the math together, and let’s do it simply. The average student loan debt for the USA is $32 731 and with 5% interest (which is something as an average by some reports). If you plan on paying that out in the next five years, you will lose $4 365 in interest. Pay it in 10 years, and you lose $9 969.
On the other hand, Pay those 5 000 dollars you have, and you have approximately $28 000 of dept left. Your monthly payment goes from 622 dollars to 528 dollars if you still plan on finishing it in 5 years. Put the 94 dollars difference in your piggy-bank, and in those five years, you saved 5 640 dollars.
With this simple investment, you lower your debt and could be saving the interest difference for yourself. If that is not smart investing for young people, I don’t know what is!
Invest In Crypto-Currencies
The good thing with cryptocurrencies is that their value rises with time as the demand for the e-currency grows. Just as an example, in 2014, one Bitcoin (the first and most famous crypto-currency) was worth $1200.
And today is something more than $15 400. Bitcoin value is not even close to your savings, but that is why you could find other crypto-currencies whose prices are as low as 60 dollars for now. And do you know how much e-currencies you could buy with $5 000?
If you want to invest in online currencies and double 5000 dollars, you need at least the basics. Of course, you’ll need more in depth research, but for starters, you could be familiar with the terms used.
For starters, you need an online wallet for storing your cryptocurrency. And today, you have them in both software and hardware options. Software wallets include mobile or desktop applications that connect with your bank account. You do have easy access to this option, but you’re putting your money in someone else’s hands.
Hardware wallets are safer because they are something like a flash drive, but you do need to buy it from a manufacturer. The advantages include having your private key (that is something like your personal info in your online presence) stored in a safe place (where hackers can’t get it through your internet connection).
Next, you need to connect your e-wallet with your bank account, credit, or debit card. Bank accounts are perfect for working with bigger sums. Credit cards are more effective because the transfer is done almost immediately (with a bank account, it might take a few days). This step is important so you could start buying and selling cryptocurrencies and transfer money back and forth between your e-wallet and personal money account. With a debit card, you could buy most of the crypto-currencies, but you can’t sell them due to security reasons.
The next process is the one of looking up through different marketplaces that offer purchasing crypto-currencies. There are tons of them out there, so you need to do a little bit of research and get familiar with their reputation, fees, exchange rates, available currencies, and so on.
And you’re good to go! You can buy the cryptocurrency of your choice and keep or trade them later on. Even if you go for a Bitcoin, you don’t have to buy a whole one; you could go with fractions and wait for their value to go up. Or, you could go for some of the newer, cheaper crypto-currencies and wait for more people to start wanting them.
The info I’ve put here is just the basic one. There still is a lot to learn since every crypto-currency has its own rules, type of mining, or distribution between peers. You need to learn how the market works in order to make the right decisions and buy and sell at the most convenient times.
Buy And Re-Sell
Our last idea for this article is plain and simple. You could go for online trading. Open up an eBay account or any other e-commerce website for that matter of fact and buy low, sell higher. There are tons of options for this kind of work. You could even set up your own online store in which you’re going to re-sell things that you buy from other, cheaper websites.
The only thing you need to do is learn how to use a certain e-commerce website and post listings there. When people order from your shop, you could just order the product from some other website and send it off to your customer’s address.
Once you get a well-established store, you could even buy bulks of products for a smaller sum, and put your own price later on, when you sell it one product at a time.
Five thousand dollars are a lot of money for something like this. The advantages of this kind of job are definitely connected to your preferences and wishes.
You could choose a niche of products you want to concentrate on and specialize only on them; you could go for the cheapest products and make money on quantity, not on quality; you can dictate how much and how often you spend and see what the most profitable thing to do is.
Maybe the biggest advantage of all is the fact that you could stop at any given moment if things don’t go your way. And that doesn’t necessarily mean with losses. The disadvantages of this kind of investment are evident – there is active work you need to do (or hire someone to do it for you); you could be falling short on customers if you don’t do any marketing; you need to learn how to use certain platforms and so on;
What to keep in mind upfront
What is the best way to invest your money and then double them with time? It depends on your overall financial situation. This can go two ways – if you have these 5000 dollars right now, but are working a closer-to-minimum-wage job, then I would recommend turning towards the last three proposals on our list.
If you pay your student loan or any other debts you might have, you’ll save on interest rates in the long run. If your salary is enough to only cover your monthly expenses, then you’ll practically save in the long run by not paying interest for student loan debts.
Investing in crypto-currencies might seem like a time-consuming job, but you don’t have to buy and sell actively. You could buy whatever you can buy, make regular checks on value, and sell parts whenever it looks convenient.
Opening up your own online shop is known to be a little more time consuming, but it’s achievable. If nothing else, that is the one investment plan where you have total control. And who knows, it might even turn into a full-time job for you since every person of the globe is a potential buyer.
And my idea is not to put you off if you were planning to get your hands on some stock market shares. Everything can be achieved if you do proper research, are willing to take some risks, and know when to back off. If you play smart and organized, in the long run, you might really make a fortune.
If, on the other side, you are a person that has a career on point and this 5 K are something you want to invest in because you don’t need them right now, then go big! Setting up your retirement plan or hiring robot-advisors to calculate the best option is something that will really pay off. Saving this way pays off because you’ll have some tax reduction in the long run and will only settle taxes once you need the money. Otherwise, you’ll regularly pay taxes even on the money you don’t spend.
Or invest in Mutual Funds or ETF’s. If things go right, with one investment, you could end up earning and spending, and earning more with money you didn’t even plan on having at first. You could be collaborating with some experienced investors or one of those smart investing managers and take off to a nice start. The money won’t come flooding, but you could be adding a percentage almost monthly.
What are the risks of investing?
The risks of investing your money usually depend on where you want to invest them. Investing in 401(k) or IRA would be pretty safe since you don’t actually spend your money but re-purpose them and practically saving. The same goes if you decide to pay off your debts or loans.
Stock markets, if you do them invidiously, are bringing bigger risks of loss, but if you invest in Robo-advisors, in Mutual Funds or Exchange Traded Funds (ETF’s), you have bigger safety measures, and thus you could be losing on one arrangement, but winning in another. Plus, you’ll be working with experienced advisors and computer software that are balancing the odds.
Investing in cryptocurrencies, buying, and re-selling have almost no risks involved. The good thing about these investments is that you have a lot of money and you don’t have to spend them all. You could buy some e-currency and don’t actively buy or sell in the future.
You could just see how the currency grows and sell it off when its price goes up. The problem with opening e-commerce is that it can be time-consuming, especially if you are already employed. Also, you won’t double 5000 dollars in a week. But, this is the least risky investment since you don’t spend a dime until you know that you are getting two.
What can you do with 5000$?
The short answer is yes. The long is, you know what they say – the more money you have to invest, the better. But, $5000 are surely enough to get you started, and later on, based on the performance and your wishes, you could withdraw earnings or re-invest them. If the type of investment works for you, you won’t even question should you re-invest.
At last, I’ll send you off with the best advice I can come up with. Investing money is almost always based on YOUR preferences, wishes, and visions. So, get all the info you could get; consult with friends, family, and professionals; make up your mind, and stay focused.
Is 5000$ a good amount for investment?
Even if you don’t see benefits right away, investing this money on something that will pay back with more money is far better than spending them on silly, little things. And remember, if Rome wasn’t built in a day, then doubling 5 000 dollars won’t happen in a day.