$5000 CASH in your hand RIGHT NOW baby! What if that happened. Do you know how to turn that $5,000 into MASSIVE upside and improve big parts of your life? Many people have started their LIFE’S FORTUNE with less, than that, but the first question is what to do early on to put the money to best use.
Table of Contents
BEST WAYS TO SPEND 5K TO IMPROVE YOUR LIFE, YOUR FUTURE, AND YOUR WEALTH.
PAY OFF DEBT FIRST.
If you owe money on a credit card, this is a great time to pay that off or reduce the balance. If you are making the minimum payment on your credit card debt, you are paying way too much interest, and you will be dragging that debt around for decades to come. Instead, use $5,000 to get rid of the debt burden. First, pay off the loan with the highest interest rate if you have more than $5,000 in debt. Then, take the money you used each month to pay the minimum amount due on that balance and double up on the one with the next highest interest rate. Never miss a loan payment since many financial institutions will quickly increase your rate to a “penalty” level.
CREATE AN EMERGENCY FUND
This crucial advice is widespread, so sometimes people just ignore it. Don’t ignore this one—having an emergency fund is essential. Emergencies happen—your car will break down or need tires, your plumbing will need a repair, or one of the kids will need glasses. The unexpected is 100% going to happen, and it will be so much less stressful if you have the money available than if you have to borrow it or put the expense on a credit card. Remember those MASSIVE rates credit cards charge you? Not having an emergency fund can put you at the mercy those companies and in a very expensive hole with very expensive debt.
Of course, it’s also possible that you could lose your job or become sick enough that you need to live on the emergency fund for a while. That’s why financial advisors recommend keeping enough money in your emergency account to cover essential expenses for at least three months. Some say up to 6 months of reserves, but for now budgeting 3 months in reserves is good. Maybe $5,000 isn’t enough, but it’s a good start. Once you begin, keep adding more until you reach your goal. And that $5,000 will buy you something even more valuable: peace of mind so you can focus on improving other areas in your life without worrying about unforeseen events coming up and knocking you down.
For me personally, I have a bunch of kids and we’re a single income household. So I take this EXTREMELY to heart, and have multiple layers of emergency cash at any point. Typically I’m holding a good chunk in direct cash, and additionally structure finances so there are several lines of credit tied to assets that I could draw down if something REALLY catastrophic or hugely unplanned happened.
Why am I so conservative? Because once in a previous business, I lost ⅔ of my net worth in a SINGLE DAY. Yes. I woke up one day that looked like any other day, and by the time I went to bed 67% of my LIFE’S WORK had completely disappeared. While this story is MUCH longer than this video has time for, I can skip to the end and tell you this: I learned that diversifying was a literal lifesaver. If I hadn’t done the diversification I did, I could have lost my ENTIRE life’s work in a single day. The ⅓ that I kept was due to me having a handful of different investments at that time.
INVEST IN INDEX FUNDS.
Take that $5,000 windfall and grow it by investing in a mutual fund that mirrors one of the stock exchanges. You can probably maximize your gains as a small investor by letting someone else do the work. Index funds are designed to duplicate the results of the major indices, which can be reliable and lucrative. You won’t likely earn huge returns, but you can expect to enjoy steady growth, and it is close to impossible to lose your whole investment. Don’t think that’s valuable? Remember all the crypto bros? Has anyone checked on them? Many received ZEROs on many of their investments. This is CRIPPLING and something that can completely wipe you out of the game. So index funds offering more diversification and more stable returns is a blessing in this context.
For my personal portfolio, I am extremely boring. I only invest into 4 ETFs: the DJ, SP500, Russell, and Nasdaq. This gives me massive diversification, and I spend almost zero time on choosing individual stocks while getting the benefits of each market.
INVEST IN REAL ESTATE BACKED INVESTMENTS
Alright so let’s be real. That $5,000 you found isn’t enough for much of a down payment for a real estate investment unless you also have some equity to leverage or some additional cash. However, you can invest $5,000 in a real estate investment trust (REIT) or a real estate fund. and tap into the potential for significant returns from real estate. REITs also provide an advantage since you don’t have to actively manage the property. And an additional benefit is allowing you to get started investing in real estate so you can START LEARNING ABOUT IT.
REITs and Funds have been growing in popularity for the last sixty years and now comprise a $3.5 trillion segment of real estate investment options. If you do you diligence, you can find something available to any size investor, including small investors just starting out.
There are other options for fractional investing in real estate, but those typically require larger capital infusions and may be limited to accredited investors. Once you get that $5,000 to grow, you can consider branching out into other potential investments. But again, I can’t suggest this enough, GET INVOLVED IN REAL ESTATE NOW. The more you learn and understand the benefits of investing in real estate, the more sophisticated you will be and be able to find better and better opportunities.
While REITs and Funds can be amazing investment options, the truth is that the end goal is to INVEST IN THE BIG LEAGUES for real estate, which inevitably means investing into the highest return projects with the biggest tax benefits. To unlock these massive investment opportunities, most often you need to be what’s called an ACCREDITED INVESTOR.
With this knowledge, you can move towards becoming accredited yourself and investing in amazing projects either with us at Saint, or with many other amazing operators.
President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.