How to invest $5,000

[lokiju]

My grandfather gave me $5,000 and said to invest it well. I have no clue what to do with it that won't be a total waste. I've never received this amount of money from anyone before. I'm looking for real advice on what would be a good way to invest the money and get a decent return on it.

Any ideas, or advice for ones who have done something with the same amount?

 

I'll only help you if you got it from quitting smoking.

 

[stev0]

hookers, drugs and alcohol

 

[sash1]

stock market

Originally posted by: SampSon
I'll only help you if you got it from quitting smoking.

LOL

 

[BatmanNate]

Hold on, I have a collegue from Nigeria I think you should talk to.

 

[Kev]

give it to me?

 

[lokiju]

Originally posted by: Kev
give it to me?

Die

 

[Turin39789]

Im willing to quit smoking for it.

Invest it in my life

 

[Red]

1st question: Do you have any debt? Car / credti card / anything that's depreciating or charing you a penalty/interest? Pay that off first.

2nd question: Do you have 6 months salary in a savings account in case your world gets turned upside down? If not, slap this in a savings account a forget about it

3rd question: If both conditions above have been met, I'd personally take the $5,000 and..... buy stocks! Don't buy Martha Stewart stock. Just go to an investment firm, tell them you've got $5,000 and since you're young (I'm assuming) put it in the most aggressive thing they've got.

 

[Aharami]

google IPO

 

[lokiju]

Originally posted by: Red
1st question: Do you have any debt? Car / credti card / anything that's depreciating or charing you a penalty/interest? Pay that off first.

2nd question: Do you have 6 months salary in a savings account in case your world gets turned upside down? If not, slap this in a savings account a forget about it

3rd question: If both conditions above have been met, I'd personally take the $5,000 and..... buy stocks! Don't buy Martha Stewart stock. Just go to an investment firm, tell them you've got $5,000 and since you're young (I'm assuming) put it in the most aggressive thing they've got.

Well I do have plenty of debt, but its the typical car loan, credit card kind. I was thinking along the lines that I could pay off debt I have or if I could figure out a way to use the money to produce more for me then that would be the best.

 

[Chumpman]

Originally posted by: Red
1st question: Do you have any debt? Car / credti card / anything that's depreciating or charing you a penalty/interest? Pay that off first.

2nd question: Do you have 6 months salary in a savings account in case your world gets turned upside down? If not, slap this in a savings account a forget about it

3rd question: If both conditions above have been met, I'd personally take the $5,000 and..... buy stocks! Don't buy Martha Stewart stock. Just go to an investment firm, tell them you've got $5,000 and since you're young (I'm assuming) put it in the most aggressive thing they've got.

Or instead of getting raped on the fees from the investment firm, you could open up an ameritrade/etrade account and invest in sound indexes (the spiders or cubes would be a good bet).

 

[JohnCU]

Open an IRA and invest in a solid, no-load, growth mutual fund.

 

[StageLeft]

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

Yep.

 

[mugs]

Originally posted by: blazert40

Originally posted by: Red
1st question: Do you have any debt? Car / credti card / anything that's depreciating or charing you a penalty/interest? Pay that off first.

2nd question: Do you have 6 months salary in a savings account in case your world gets turned upside down? If not, slap this in a savings account a forget about it

3rd question: If both conditions above have been met, I'd personally take the $5,000 and..... buy stocks! Don't buy Martha Stewart stock. Just go to an investment firm, tell them you've got $5,000 and since you're young (I'm assuming) put it in the most aggressive thing they've got.

Well I do have plenty of debt, but its the typical car loan, credit card kind. I was thinking along the lines that I could pay off debt I have or if I could figure out a way to use the money to produce more for me then that would be the best.

How much credit card debt do you have? You're better off paying that off if the interest rate is high, because any returns you make on your investments will be outweighed by your credit card interest.

 

[cyberizer9]

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

 

[Red]

Originally posted by: cyberizer9

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

Yeah, forget the firm thing. Open a Roth IRA. ($2000 max right?) and save the rest for next years.

 

[Davegod75]

Roth IRA: $3000/year max . might be? $3500/year starting this year

 

[lokiju]

Originally posted by: Davegod75
Roth IRA: $3000/year max . might be? $3500/year starting this year

Woa, that sounds like it may be worth it.

Thanks to all.

 

[ultimatebob]

Simple rule of thumb... If the interest rates on your credit card or car loan debt are more than the estimated annual return on your investment, you should pay off the debt first. Otherwise, you're losing money.

 

[Hector13]

Originally posted by: Skoorb

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

Yep.

Nope... i don't know why people have such a fascination with IRA accounts.. sure, they are great ways to invest for retirement (duh!)... but you can't touch the money till you are 60!!! (except for some specific situations)

For most people, unless you have plenty saved, liquidity is much more important than the potential tax savings from an IRA.

 

[JohnCU]

Originally posted by: Hector13

Originally posted by: Skoorb

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

Yep.

Nope... i don't know why people have such a fascination with IRA accounts.. sure, they are great ways to invest for retirement (duh!)... but you can't touch the money till you are 60!!! (except for some specific situations)

For most people, unless you have plenty saved, liquidity is much more important than the potential tax savings from an IRA.

Umm, that is the whole point of savings: DON'T TOUCH IT. A Roth IRA grows tax free, that is this guy's best bet.

Although, it is always a good idea to have a money market account for emergencies.

 

[StageLeft]

Originally posted by: JohnCU

Originally posted by: Hector13

Originally posted by: Skoorb

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

Yep.

Nope... i don't know why people have such a fascination with IRA accounts.. sure, they are great ways to invest for retirement (duh!)... but you can't touch the money till you are 60!!! (except for some specific situations)

For most people, unless you have plenty saved, liquidity is much more important than the potential tax savings from an IRA.

Umm, that is the whole point of savings: DON'T TOUCH IT. A Roth IRA grows tax free, that is this guy's best bet.

Although, it is always a good idea to have a money market account for emergencies.

Yes it depends on what his goals are, and of course he can touch it - there are just penalties.

I suspect that this $5k was quite unexpected, and if he drops it out of sight and just lets it appreciate he'll quickly forget about even using it or what he could buy, and voila several decades later it's a tidy sum of cash.

Alternatively a straight up investment approach with an index fund is a good idea.

Him choosing individual stocks would be a bad idea, obviously.

 

[Hector13]

Originally posted by: JohnCU

Originally posted by: Hector13

Originally posted by: Skoorb

Originally posted by: JohnCU
Open an IRA and invest in a solid, no-load, growth mutual fund.

Yep.

Nope... i don't know why people have such a fascination with IRA accounts.. sure, they are great ways to invest for retirement (duh!)... but you can't touch the money till you are 60!!! (except for some specific situations)

For most people, unless you have plenty saved, liquidity is much more important than the potential tax savings from an IRA.

Umm, that is the whole point of savings: DON'T TOUCH IT. A Roth IRA grows tax free, that is this guy's best bet.

Although, it is always a good idea to have a money market account for emergencies.

sh*t, why bother having money then?

I don't know about you, but the only reason I invest is so that I can have more money later to spend.

And, you have to remember your personal "time value of money". To me, having 10k now (when I am 25) is woth a buttload more than having 20k when I am 60 and can't have any fun with the money.

 

[Hector13]

Originally posted by: Skoorb
Alternatively a straight up investment approach with an index fund is a good idea.

Him choosing individual stocks would be a bad idea, obviously.

yes... I completely agee with both those points.