How To Invest $5000
Before you consider investing your first $5,000, you should set up a savings account to cover some important contingencies. This account should be extremely liquid(meaning you can withdraw money at any time for any purpose).
Beyond this, you can consider investing in yourself, in your training or in your family. This may be your best investment, either for the return in additional training that may open you up to new opportunities in your career or that of a member of the family.
Investing in Securities
Perhaps you’re all set on training or further education. Why not make the laws of compound interest work for you? And the sooner the better, since time will play to your advantage. (see chart from Getrichslowly.com)
For example, you would have to double your initial investment to $10,000 at age 40 in order to generate the same returns as a 30yr old who has an initial investment of $5,000.a This is a very significant difference, and it shows that it is more important when we start investing than how much we invest. If you regret not having started earlier, you better not waste time complaining: it’s much better to start investing today.
Aspects to take into account
A good decision is informed by your individual priorities, and to quantify and assess them, there are a few things we should consider:
1.Know our needs, know our investor profile.
The estimated long-term profitability of a security can vary from 1% to 8% depending on the risk or volatility you are willing to bear. We must also establish an investment plan (the when and the quantum). The best plan will be the one we can maintain over time.
2. Know our financial psychology.
Do we have enough control over of our emotions? If not, it’s better to put ourselves in the hands of an expert or a service that will manage our investments.
3. Maintain Profitability.
It’s also important to optimize our costs so that the profitability that remains in our pocket is maximized and not diluted in commissions.
Once we know the optimal distribution for our investment profile (according to our risk tolerance), we must choose which assets meet the optimization requirements of the portfolio (at an optimal cost),
5. Finally, Optimize Our Taxes