What should i invest 5000 dollars in

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? That means your skills are a commodity. 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. 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.

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.

Notably, k s and other retirement vehicles are also robust investments because of their favorable tax treatment. Many allow you to contribute with pretax dollars, which reduces your tax burden in the year you contribute. With others, such as Roth k s and IRAs, you contribute with after-tax income but withdraw the funds without tax, which can reduce your tax hit on the year of withdrawal.

And remember, if your money has grown for many years, there will be much more than you initially contributed so that those tax-free withdrawals will be worth it. In both scenarios, the earnings on what you invest accumulate tax-free within the account. If you find it hard to save money throughout the year, consider setting aside part or all of your tax refund as a way to get started with investing. Before the specifics, a few general points are worth underlining.

In general, your portfolio should become steadily less risky as you approach retirement. If you prefer to play it safe, park your sum in a certificate of deposit CD from a bank or other lender or use it to buy short-term Treasury bills , which can be purchased through an online broker. The growth potential with both options is limited, but the risks are virtually zero. For those who are comfortable with a little more risk, many choices are available, even for small investors, that promise greater returns than CDs or T-bills.

One is a dividend reinvestment plan DRIP. You buy shares of stock, and your dividends are automatically used to purchase additional shares or even fractional shares. This is an excellent choice for small investors because the shares are purchased at a discount without paying a sales commission to a broker. Another option for starting small is an exchange-traded fund ETF , most of which require no minimum investment. Unlike most mutual funds, ETFs typically feature a passive management structure, which translates to lower ongoing costs.

However, among other drawbacks to ETFs , you must pay fees on their transactions. To lessen these charges, consider using a discount broker that does not charge a commission—or plan to invest less often, perhaps investing larger amounts quarterly rather than making small monthly purchases. Crowdfunders connect investors with money to lend and entrepreneurs trying to fund new ventures.

As the loans are repaid, investors receive a share of the interest in proportion to the amount they have invested. Crowdfunding offers high risk, as many new ventures fail, but also the prospect of higher earnings. With this type of fund, you choose the target date.

The investments in the fund are automatically adjusted over time, with the overall mix moving from riskier to safer as your target date gets closer. Why is this important? You can make riskier investments that might earn higher returns. Investing in individual stocks that pay dividends is a smart strategy. You will have the option of receiving the dividends as cash payouts or reinvesting them in additional shares.

This investment level allows access to additional options, including more mutual funds. You just have to put money in on a regular basis and those funds will be disbursed across those investments. Index funds are commonly touted as easy diversification in specific markets, usually an entire stock market index.

These funds track the performance of those indices, which usually follow up thousands of publicly-traded companies. Plus, there are questions whether portfolio fund managers can, over the long term, outperform their benchmarks, so index funds may be a good option. An ETF can be bought and sold much like a stock.

You can also see price of the ETF change in real-time. Online banks typically offer more interest than a traditional bricks-and-mortar bank. While online banks offer more interest, the only downside is that they don't have physical locations, which makes it difficult to do things like talk to a teller or deposit cash. See our list of Best Online Banks.

Here are the top online banks that have the highest savings accounts rates and free interest checking accounts:. CDs currently earn a small amount of interest, however, any interest does add up.

For people who are already experienced savers, Solari notes that there are more investment choices to consider. Limited time offer. Terms apply. You could build a portfolio of ETFs, or you could have one of these computer-driven advisors manage a pre-built portfolio for you. Robo-advisors offer complete portfolio management. However, there are a few free options. Axos Invest has no minimum and is free indefinitely. Our picks for the best robo-advisors. You can open an IRA at any online broker.

For more, see our list of the best IRA account providers. But one or two mutual funds do not a diversified portfolio make.