Where do I invest $5000 – $10,000 for x-amount of time?

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April 24th, 2006

This amount of money can really get you started down the path to some great investing fun.

Short Term – Banking Bonuses Again
Tying up this kind of money in eBay sales would be a bit much to manage (but is a good diversification strategy), so we’re back to the banking bonuses.

With this amount of money you are looking at some pretty good bonuses. Some banks will offer a couple hundred dollars, some have offered things like PDAs and laptops in the past. Combining these bonuses with your eBay sales is an excellent strategy.

Once again, set up your spreadsheet to keep track of investments. Add columns for tracking numbers for items being shipped and phone numbers to account execs to make sure you are getting all you deserve.

Medium Term – CDs or Stock Market
A one to 5 year CD can be great place to park your money. At the time of this article, you can find CDs in this term around 5% APR. Upon cashing out, you can get between $1,250 and $2,500. Reinvesting your profits increases your earnings. This is another strategy where all you need to do is start the investment, and then check in once in awhile to see how your money is growing.

If you have more time and want to be more involved in your investment, you can begin to invest in individual stocks. The best strategy here is to being looking into companies that are close to the industry you work in, or are based in your area. I know of a class being taught at the University of Arizona that specialized in reporting on companies in the area that were all but ignored by Wall Street.

They found that Taser was ready to go in excess production capacity, so they did site visits and recommended a purchase to the University. Taser did go big, and now it is a big item on Wall St.

So, invest in something you know about, leave your money in that company for 6 months to a year and stay strong. The biggest mistake beginners make is to assume that when the price changes, you have incurred a loss. You do not incur a loss until you sell, so determine a holding-period you are comfortable with, and stick to it. Never buy high and sell low.

Long Term – CDs, Stock Market or Savings Account
While not as glamorous as other investments, a savings account can be a great investment, especially if you have significant money to invest. Banks such as ING offer sign-up bonuses as well as more than competitive interest rates. The reason is that internet banks do not have the same overhead as traditional brick & mortar banks. Plus, at this level of investment, all of your money is completely protected by FDIC insurance.

The CD strategy is similar to the Medium Term strategy, except that you continue to roll over your 5-year investments, reinvesting your profits each time, and multiplying your return each time.

The stock market strategy here is to invest in spiders or indexes again. Once again, you have the ability to “fire and forget” after opening your account. Growing this amount of money at 10% APR is very exciting.

Entry Filed under: Financial Investments
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