5 ideas for investing $5,000
/Taking one final glance in the mirror, Rose* hesitantly gave a tiny smile of success.
“Wow,” she whispered quietly to herself. “What a difference a year makes.” Drinking in her reflection, she couldn’t help but to admire what she saw. A woman who stood tall and fully grounded in her skin. Her once long, luscious strawberry blonde locks had been traded in for a chocolate pixie cut. Having shedded twenty-five pounds, thanks to her Cross Fit weight training and diet overhaul, her slender frame was strong yet feminine in her New York and Company creme colored jumpsuit.
Just last year, she thought her world was over. At the ripe old age of 29 (as society would have her think), she was single and depressed. Her fiancee had dumped her. Claiming that he had had a change of heart, only to find out that his fling in Dubai may have had something to do with it. The breakup sent her into an immediate spin of questioning everything in her life. Her job, her friendships, her purpose in life, her relationship with food and not least of all, her relationship with money.
Working full-time as a makeup artist for a department store in Scottsdale, Rose was ready for a change. She was ready to move to the big city of Los Angeles and embark on a career as a freelance makeup artist. But, before she made the move, she wanted to make some big-girl decisions about her money and start investing.
She had about $5,000 that she could play with, but was too scared to invest it. Rose knew the importance of making money work for you (how else was she supposed to be able retire and live in the South France), but was a tad embarrassed that she didn’t know the first step to take. Nor felt comfortable asking anyone for help.
I had met Rose at a gala on one of my speaking gig trips to Arizona. Rose and I immediately hit it off, easy to do when you’re the only two obnoxiously crowding the bartender to get a refill as soon as your drink is empty.
As luck would have it for a money blogger, Rose and I started chatting about money. Rose confided the hesitation around investing to me along with her recent breakup, the haircut and her plans to move to Los Angeles. The whole mirror scene is a figment of my imagination. Hopefully you don’t mind that I took literary liberty with that, Rose.
After doing some research, here are five ideas that I came up with for Rose (and maybe, you!) to invest $5,000.
Before you get started, ask yourself if you need access to these funds within the next five years. If so, I recommend using an investment vehicle that is liquid. This means that you can easily access the funds with no, or little, penalty fees.
High-yield savings account: If you’re new to investing, it’s a good idea to begin with a conservative approach. With a high-yield savings account, the $5,000 you put in will be returned you. And then some. I’m a big fan of Radius Bank . It has one of the highest APY rates on the market.
Robo-advisor: Usually working with a personal financial advisor is costly because of the fees we need to pay to compensate a human being for their time and expertise. An alternative is to use a tech platform, until you are ready to hire someone. A couple of options to look into are Ellevest and Moola.
Real estate: if real-estate is your jam, unfortunately $5,000 won’t get you very far. But, you can check out platforms such as Fundrise, RealtyShares, RealCrowd for non-traditional real estate opportunities.
Personal loans platform: these platforms give you the opportunity to help another individual pay down a loan, cover their IVF costs or grow their small business. Two platforms you can check out are Prosper and Lending Club.
Invest in your small business or your personal development: as Warren Buffet says, the best investment is the one you make in yourself. Consider working 1:1 with a business or life coach, enrolling in a class, or checking out Marie Forleo’s B-School program to boost your marketing skills.
This post is in partnership with Radius Bank.
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*Name changed to protect identity.
