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.
Thus, you’ve earned the right to turn your attention to external investments, such as investing in real estate, peer-to-peer lending, tax liens, or other income-producing opportunities.
At this dollar value, you’ve 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 six skills that you can teach 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.
- 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, Twitter, Pinterest, etc.) or Video Ads (YouTube)
- Podcasting – With podcasting on the rise, there is an increasing need for studio set-up, show summaries, transcriptions, and promotion. 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.
- 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 very, very high demand.
- 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. This skill set is known as “post production” work and it’s needed by nearly every business worldwide.
- Phone and Video Sales – 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.
- Copywriting – Copywriting is the art of writing to sell (aka, persuasive writing). Teach yourself this skill through books and courses and you can immediately command six-figures or more.
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 flow producing assets
- Reinvest your investment gains into new cash-flowing producing assets
When you do this, you’ll exponentially grow your wealth over time.
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.
Want more help with your questions? Get in touch or connect with me Instagram, so I can share in your life too!
*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.
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