“Anyone can invest.”
It’s likely that you’ve heard this and similar statements before. If you’re anything like me, you probably didn’t believe this at some point in your life.
There are too many bills to even think about being able to invest 5k, right?
Even if you only have a few thousand dollars set aside, you can invest to make the most of that money.
If you’re ready to start growing your money, keep reading. I’m going to walk you through seven potential investment options to put your money to work.
1. Buy a House with a Low Down Payment
If you aren’t a homeowner (or you don’t yet have your dream home), this is an extremely realistic goal that you can strive for. While second home buyers or real estate investors may need to put 20% down, first-time homebuyers only need 3% to 3.5% for their down payment.
This means that you could use $5K as a down payment on a $150K home or condo.
If you decide to act on this, your primary concern will be your closing costs. To eliminate these, you can either ask the seller to cover them (a seller will often be willing to do this if you offer them a competitive purchase price) or you can roll them into your mortgage.
Or, you’re a military service member or veteran, you can also use a VA loan to buy a home with no money down. In this case, you can use your $5K to cover your closing costs. If you’re not a service member, you could do the same thing in a rural area using a USDA loan. See this article for more tips on buying a house with little to no money down.
The great thing about investing into a home is that you’re likely to see increases in its value over time and you’ll get great tax advantages, such as being able to deduct your mortgage interest.
2. Invest 5k into Real Estate Syndications
If you’re an aspiring real estate investor but only have $5K, real estate syndications are another effective the way to go. These groups allow you to invest in real estate at a low cost while still receiving equity shares (aka, partial ownership) of the properties that are being acquired.
For as little as $1,000, you can invest in Cardone Capital. Even better, you don’t have to be an accredited investor to do so, which the U.S. Securities and Exchange Commission (SEC) often requires. All you have to do is sign up on their site and get ready to put your money to work.
Likewise, you could invest in Fundrise for as little as $500. This real estate syndication is an eREIT that allows you to invest in cash-flow-producing real estate.
Both of these organizations allow you to invest your money into real estate without having to buy the homes or units yourself.
This lets you invest less money on the front end and avoid the responsibilities and costs of ownership, while still benefiting from many of the benefits of real estate ownership, such as:
- price appreciation
- debt paydown by tenants
- tax advantages
- cash flow
3. Buy Up Bitcoin (BTC)
If you haven’t invested in Bitcoin yet, now may be the time. Investing in Bitcoin allows you to make a bet on a huge technology trend. When Bitcoin first arrived on the scene in 2010, it was worth less than one cent. Now, one Bitcoin is worth over $20,000.
Plus, Bitcoin recently dropped in value by over 50%, which could make now a good time to buy it at discounted prices.
Because Bitcoin is a verifiably scarce asset, buying it is a great way to protect yourself against inflation. There will never be more than 21 million Bitcoins in existence.
Both billionaires and financial institutions are piling into this asset class, with Goldman Sachs reporting that it thinks Bitcoin will compete with gold as a store of value.
In addition to your Bitcoin (hopefully) going up in value over time, you can also stake it to earn interest. Earning interest on cryptocurrency is similar to earning interest on a savings account. You deposit your Bitcoin to earn compound interest over time.
The only difference is, you’re more likely to paid a decent rate of return on your Bitcoin than on your savings account.
4. Snatch Up Ethereum (ETH)
Similar to Bitcoin, Ethereum is another compelling way to start investing your savings, especially if you only have $5K. Currently, it’s second largest cryptocurrency by market cap.
Ethereum is a smart investment if you’re looking to bet on the future of blockchain technology. This includes Web 3.0, NTFs, dApps, and more.
The main difference between Ethereum and Bitcoin is that Bitcoin is an online currency. Meanwhile, Ethereum is a ledger technology. Companies use Ethereum to build new programs and expand on ideas.
Thus, investing into Ethereum means you betting on the future growth of blockchain technology. Based on this exponential growth of this tech to date, ETH seems like it could be a pretty smart bet.
If you’re ready to buy Ethereum, you can again use the Voyager app to make things simple.
5. Buy Digital Land in the Metaverse
Buying land in the metaverse is a relatively new trend, but it’s not a new concept. The metaverse has been around for a while, but huge companies and real estate developers are investing in the metaverse. That means that it could be time for you to evaluate this trend, too.
The metaverse is just a term that describes a virtual world where you can interact with others, play games, shop, and buy virtual land if you like. There are several different metaverses that have come into existence, but the two most popular ones are The Sandbox and Decentraland.
In the metaverse, you can buy digital assets, such as land, using real money. When the metaverse first started, items within it ran around $1 to $9. Now, some items (such as plots of digital land) are selling for thousands of dollars. This is the kind of return that you can sometimes achieve by jumping on trends early.
Investing in the metaverse land can be thought of as buying digital real estate. Assuming these metaverses continue to grow in popularity, your investment could go up in value.
While it’d be hard to buy physical land for only $5K, this amount can buy you a nice plot of digital real estate in both The Sandbox and Decentraland.
6. Bet on a Stock You Believe In
When it comes to investing in stocks, you may hear that diversification is the best thing to do. However, many wealthy investors advise against the diversification. Instead, they recommend you to choose one company that you strongly believe in.
As wealthy Andrew Carnegie famously said, “Put all your eggs in one basket—and watch that basket.”
For example, you could buy stock in Coinbase Global (NASDAQ:COIN), because cryptocurrencies are a massive trend and Coinbase is a leading crypto exchange. Or, you could invest 5k into Amazon, (NASDAQ: AMZN) because it is investing heavily into expansion within India, a massive country that is overtaking China to become the world’s most populous country.
The point here is that you’re choosing a company that you wholeheartedly believe in, based on the trends that you are actively watching in the world.
7. Earn Cash Flow from Peer-to-Peer Lending
Peer-to-peer lending allows consumers to take out loans from a group of peers rather than borrow from a bank.
Put simply, peer-to-peer lending involves the act of lending out money to other people (or businesses) and earning interest payments for doing so. With this approach, you get paid back your original amount plus interest from the borrower over time.
With peer-to-peer lending, you can earn nice cash flow from the interest payments. On average, you can expect to get about a 10% return on your investment. Plus, you get the satisfaction of knowing that you helped someone get the money that they needed.
To help you make good lending decisions (and protect against default), most peer-to-peer lending sites have ways to evaluate your borrower’s credit worthiness.
If you only have $5K to invest, this can be a great way to turn it into a passive income source.
You can view a list of peer-to-peer lending platforms here.
Ready to Invest 5K?
Whew! With all of the low cost investment options that are available today, it’s an incredible time to be alive.
If you’re ready to invest 5K into the opportunities that caught your eye, let me know in comments which moves you’ll be making.
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