What is the best way to invest 5000 dollars? When I open up my Instagram stories to questions about financial freedom, this is one of the most common questions that I get. I think it’s a reoccurring question for two key reasons:
- It’s the amount of money people have saved up and are ready to deploy.
- It’s the amount of money people aren’t scared to part with.
If you only have $5,000 to invest, there’s a surprising answer as to what you should invest in.
If you only have $5,000 to deploy, the single and only thing you should be investing into at this point in your wealth building process is … YOU.
What is Money?
What is money? It took me years to figure this answer out and to really understand it. It also took a successful mentor to reveal it to me.
So, what is money, really?
Money is a scarce, in-demand resource.
To get more of it, you have to make yourself into a scarce, in-demand resource, because people will only trade their money for things of equal or greater value.
The reason that you only have $5,000 to invest is that you aren’t yet commanding a high income within the marketplace. You aren’t commanding a high income, because you’re not yet a scarce, in-demand resource.
Therefore, you can’t trade your skills for other scarce, in-demand resources (money).
If, and only if, you make yourself more valuable to others will you be paid more than you are right now. That’s how our marketplace works. It’s very simple – you are paid in proportion to what you are worth. In a capitalist marketplace, it’s that straight-forward.
Thus, if you only have $5,000 to invest, the first and only thing you need to invest in is yourself.
Thankfully, we’re now living in the Information Age, so the ability to acquire scarce, in-demand skills is literally at your fingertips and you can frequently do it for free (YouTube, articles, books, etc.) or for a small investment (digital courses, events, etc.).
Increase Income First, Invest Second
When you are paid more, then you can save more (dramatically more). And, when you save more, you’ll have a whole lot more to invest.
In my opinion, when you reach approximately $25,000 – $50,000 in savings, you’ve proven that you can effectively collect money.
At this dollar value, you’re also proven that you can control your costs and collect money well in excess of your requirements to live.
How to Think About Money
If you’re going to be financially free, you have to stop thinking about your bank account 5 days from now and starting thinking about how you want it to look 5 or 10 years from now.
If you’re going to be financially free, then you’ve got to learn to treat your life like a business.
With a business, there is the total (gross) money that comes in, then there is money that you spend (invest) to grow the business, and over time these investments create a return-on-investment (ROI).
With a business, you would starve it of growth if you tried to take every cent out of it. This is what most small business owners do and it’s why most small businesses fail.
In contrast, successful companies know that success depends on reinvesting some of the profits back into the business.
When you treat yourself as a business, you commit to growing your income earning potential by acquiring increasingly valuable skill sets.
That is, when you produce money or get paid by an employer, you should immediately re-invest some of it into making yourself more valuable, so that over time, you’ll achieve a return-on-investment (ROI).
You just can’t save your way to financial abundance. Despite what your parents and teachers taught you, that is financial contraction. It is financial defense.
Investing some of your money into creating new income-producing opportunities for yourself is the most direct and rapid path to wealth. Whenever you meet someone who created wealth quickly, this is what they have done.
How to Increase Your Income?
Alright, if you believe me that you need to become more valuable in order to earn more money, the question then becomes, how do you do this?
Unfortunately, school isn’t a great way to get paid a premium within the marketplace, because in school, everyone with the same degree learns the same skills. That means your skills are a commodity. In contrast, to become a scarce, in-demand resource that the marketplace wants, needs and will reward with a big paycheck, you’re going to need to stack new skills on top of what you were taught in school.
If you’ve only been able to collect $5,000 to date (and not $50,000 or $500,000), then you’ll need to invest these early funds into self education, including books, digital courses, live trainings, and mentorship. I’d encourage you to budget at least 5 to 10 % of your total income to this each year – and the more, the better.
Most likely, your parents taught you to conserve money, not to spend it to create abundance and financial freedom. However, to become financially free, you have got to learn to let go of scarcity and start making investments into yourself.
At first, your investments will be small, like $50 or $100, but with time, these investments will grow. That is when wealth will become a self-propagating cycle for you.
Each investment into yourself will make you more valuable, and each time you become more valuable, you will have more money to invest back into yourself, your skill sets, your connections, and eventually, income-producing assets that put even more money into your bank account.
What Investments Should You Make In Yourself?
Looking for actionable advice?
Here are five investments that you can make in yourself to immediately have higher income earning potential.
For each of these opportunities, you can either offer these new skills to your current employer (positioning yourself for a substantial raise) or your can offer your newly acquired skills to other people in your spare time, creating a second stream of income.
1. Paid Media
Learning paid media is a massively powerful way to make yourself more valuable in today’s marketplace. Paid media can include running:
- Google Adwords
- Display Ads
- Social Media Ads (Facebook, Instagram, etc.)
- Video Ads (You Tube)
Every single business owner and entrepreneur is looking to hire for these positions, because nearly everyone has a smart phone within a few feet of their body. Best of all, you can often learn paid media skills in a few short months.
With podcasting on the rise, everyone who hosts a podcast is looking for people with expertise in studio set-up, show summaries, transcriptions, and distribution across the various apps.
Teach yourself to be an audiophile – a person who is enthusiastic about high-quality sound reproduction – and you’ll have immediate value in today’s economy.
3. Video Production
Video is one of the biggest trends in of the last few years, with an estimated 81% of businesses now using video as a marketing tool.
If you learn how to record, edit, and distribute high-quality video, you’ll also be in demand. Very, very high demand.
4. Post Production Skills
Increasingly, businesses are using one piece of content, such as a single video, and then chopping it up into numerous content marketing pieces to be used across various platforms.
For example, a single video clip can also be turned into a podcast, short video clips for Facebook and Instagram, quote cards for Twitter, and more. This skill set is known as “post production” work and it’s needed by nearly every content producer and business worldwide.
Curious of an example of someone who is building an empire using post production work? Gary Vaynerchuk.
He’s hired an enormous team of highly compensated employees who specialize in this scarce and valuable skill set. It’s how “Gary V” has become a household name.
5. Phone, Video or In-Person Sales
If you learn sales skills, you will always have money. To learn sales, you’ll need to understand the sales process, which involves prospecting, fact finding, handling objections, closing and follow-up.
What most people don’t know is that sales is a skill that can easily be learned, and sales people who sell high-ticket products can easily make $100,000 to $500,000 per year.
Again, this skill set doesn’t require a college degree and can be learned within a few months of dedicated study. Acquire this skill through books, an online course, or dive into free YouTube videos.
How to Generate Wealth
What I love about the skills described above is that you can “skill stack” them on top of each other.
For example, there’s a doctor, Sandra Lee, who is widely known as Dr. Pimple Popper. While she is a Dermatologist by training, she did not come into wealth until she learned how to be a YouTube and Instagram influencer. Only when she spent time and money to learn how to integrate social media into her medical practice, did her opportunities and wealth grow exponentially.
Because of her investments into self-education in the years after acquiring a medical degree, she now has her own realty TV series, skin care line, and merchandise. It short, it was her decision to invest into social media skills and then combine them with medical skills that exponentially grew her wealth and positioned her to invest.
Have you ever noticed that her video is high quality, her sound quality is great (not garbled), and her content is engaging? These things didn’t happen by accident. She wasn’t lucky. She was smart and she invested in herself and the equipment she needed to produce quality video footage.
Similarly, my background is in Biotechnology and Molecular Biology, so many of my peers are scientists or work for biotech companies. However, I went a different route and choose to buy a course that taught me about blogging and search engine optimization (SEO). This allowed me to create an exponentially more profitable opportunity for myself.
Today, I run the world’s largest stem cell industry blog, BioInformant.com. It was these early investments into myself that changed my life and positioned me to make larger income-producing investments, such as real estate, in the future.
Skill Stacking for Success
For many people, stacking sales skills on top of the skills they learned in school or on the job is enough to increase their income by 2-3X.
For example, take a graphic designer who works for an employer for $50,000 per year. Right now, there are graphic designers graduating from high schools and colleges all over the world, so they are not in scarce supply. It is also possible for business owners to directly hire graphic designers in other countries through websites like Upwork.com for very little money (a couple dollars per design).
So, how would a USA-based graphic designer command more money in the marketplace, when the supply for their skill set is not scarce, nor in high demand relative to the number of people who have it?
The answer is that the designer needs to stack other skills on top of their design skills.
I’d recommend that this person first invest in a course to learn social media skills. By growing large social media audiences, the designer could get their designs out in front of large audiences of people on Instagram, Facebook, Pinterest, and other visual platforms.
Next, I would recommend that they invest into learning sales skills, by buying books or online courses (or watching free videos on YouTube). Once they know how to sell with confidence, they could offer their design skills to businesses at a higher price point that what their employer is paying them now.
Not only would this create a second stream of income for the designer, but they would immediately benefit from the abundance of tax advantages available to business owners, because they would be selling their services directly.
Additionally, the designer could target high income opportunities, such as designing landing pages for ad campaigns for individuals or companies who are running paid media ads. In this case, the designer could command a high price point up front, plus ask for a share of the revenue produced from the ad campaign over time.
If the designer also studied ad conversion psychology (what drives sale conversions on a landing page), then they could command even more money on top of that.
Ask yourself, do you think a designer working for a single employer will make more money? Or, do you think a designer who works for an employer and who has huge social media audiences showing hundreds of client testimonials and who knows how to pick up the phone to call companies who are spending $500,000 a month on Facebook ads will make more money?
The answer should be obvious. Simply put, one of those designers had made themselves more valuable to the marketplace by stacking new skills on top of their design skills. The other one has not.
Best Way to Invest 5000 Dollars
To summarize, the best way to invest your first $5000 is:
- Invest some (or all) of your money into learning new, more valuable skills
- Get rewarded with an increased income
- Save more of your total income
- Once you’ve saved $25,000 or more, start investing into cash flowing producing assets
- Reinvest your investment gains into new cash-flowing producing assets
When you do this, you’ll exponentially grow your wealth over time.
If you’ve followed the instructions above and have successfully saved up $25,000 or more, then what investments should you consider next?
Let’s explore this with several actionable tips.
Passive Income: The Holy Grail
If you’ve got $25,000 in savings, then you’re ready to put your money to work, instead of putting yourself to work.
To do this, I’d recommend you find investments that will pay you at least 6% in cash flow per year – and the more, the better.
Specifically, I’d recommend that you seek out passive, income-producing investments. Passive investments are those that don’t require you to actively work for the money. Income-producing investments are those that kick off cash flow (i.e. pay you to own them).
When you are in the early stages of wealth building, the single most important thing you need to do is grow your income, and ideally, create multiple flows of income. This is because the average millionaire has at least 7 flows of income.
If you’re got extra time and a love for real estate (like me), you can also directly invest in income-producing real estate. This asset class has the potential to be extremely profitable and you’ll get profound tax advantages. However, finding, buying and managing this real estate will take some of your attention away from producing more income, so be savvy about when and if to pursue this decision.
Directly investing in real estate is somewhere between an active and passive investment, so I affectionately call it a “less active” investment. If this appeals to you, you can learn all about how to get started in real estate in this article.
If you want to pursue passive investments, then read on below.
Put Your Money to Work with Cardone Capital
One income-producing investment that I’d recommend for you to consider is CardoneCapital.com.
With Cardone Capital, you get to ride along on deals purchased by the seasoned real estate investor, Grant Cardone, who has 30+ years of experience investing in income-producing real estate. He invests in high-quality apartment buildings across the United States.
This passive real estate investment will pay you 6% on your money, plus 2/3rd of all of the upside as his company raises rents and improves the performance of the properties under management.
With Cardone Capital, you also get to own a percentage share of each property and benefit from many of the same tax benefits that you would get from directly investing in real estate. That means, when properties sell, you have a chance to get a big “score” right along with Grant himself.
Historically, Grant has achieved 15% Internal Rate of Return (IRR) for his investors, and in many cases, even better.
With this rate of return, your money will double in under five years (approximately 4.8). That’s pretty incredible. Plus, he pays you your income distributions every single month, which is the same rate at which your bills usually roll in.
Currently, Grant is only offering “Accredited Funds” in which you need to make $200K or more per year or have a million dollars in net worth to quality. You also have to have a minimum of $100K to invest.
However, he previously offered a Regulation A Fund that allowed anyone to invest with no income or net worth restrictions for as little as $5,000.
Because his Regulation A Fund filled up quickly, I’m anticipating he will open another one soon once he can get approval from the U.S. SEC (Securities & Exchange Commission).
When he does, you’d be smart to act fast if you’ll looking to invest with him for as little as 5000 dollars.
You can get started with Cardone Capital here.
Get Paid 8-12% with Fundrise.com
Fundrise let’s people invest in real estate online through which it calls an e-REIT (electronic Real Estate Investment Trust) or an e-Fund. This prevents you from getting some of the tax advantages traditionally associated with investing in real estate.
However, I love that Fundrise has historically paid out 8-12% return to investors over the past 20 year, has their fund backed by real (“hard”) assets, and lets you invest for as little as $500.
This low threshold to get started (only $500) also makes Fundrise more accessible to more people.
Impressively, the company’s trailing 20 year annualized return has been 12.3%.
At this rate of return, your money would double every 5.8 years and quadruple it every 11.6 years. Meaning, if you invested $10,000 today, based on their historical rate of return of 12.3%, your money would be worth $40,000 (4X as much) in only 11.6 years.
In short, Fundrise will let you put your money to work and pays you a strong return.
You can get started with Fundrise here.
What are My Investing Qualifications?
What makes me qualified to speak as to how you should invest your money? The short answer is, it’s completely up to you as to whether you want to listen to me. What I can tell you is that I have nothing to gain from what you do, nor anything to sell you.
I simply know that being financially free is one of the most powerful things that can happen in your lifetime, because it frees you up to pursue your passions and your purpose. For LGBTQI+ folks, being financially free also allows you to be your truly authentic self, with any fears or repercussions. I want that for you and I want that for humanity.
I also run a number of profitable businesses, including BioInformant.com, a website that is the world’s largest stem cell industry news site and which sells data packages to major biotech, pharma and investment companies, like GE, Pfizer, and Goldman Sachs. I push the earnings from those businesses into cash flowing producing assets, including but not limited to, a portfolio of cash flow positive properties along the East Coast.
I also paid off hundreds of thousands of dollars in student loan debt, traveled the world playing rugby (including a two year stint in Christchurch, New Zealand), represented the USA Rugby Team for 7+ years (reporting regularly to the USA Olympic Training Center in Chula Vista, CA), and bought my dream home (a custom built cabin on 4 acres) by the age of 34. Plus, I’ve never been tied to a job or a location to earn money.
This was all possible because I learned how investing and wealth really works. And, I can tell you, it doesn’t work quite the way that you parents and teachers told you it does.
Go Forth and Invest!
Does the wealth building process make sense to you, and if so, where are you in the process? Are you in the skill stacking phase where you’re working to increase your income? Or, are you ready to deploy your money into cash flow producing investments?
Let me know in the comments below.
*Disclaimer: I’m not a financial planner, so nothing in this article should be construed as financial advice. Before making any decisions, you should consult with a professional adviser, such as a financial planner or CPA. I have no financial relationship with any of the companies mentioned in this article.