If You Have $5,000 to Invest, Here’s What to Do

You’ve worked hard to save your money.

Now that you have some extra, you know you should invest it. After all, that’s what the experts tell you. But how?

Sure, you can Google investing tips all day, but, really, you just want someone to tell you what to do… preferably someone who’s not a pricy financial adviser. 

Don’t worry. That’s why we’re here. We’ll show you four specific and super simple ways to start investing your money. None of them take more than five minutes to sign up for, and once you’re done you can sit back and — fingers crossed! — watch your money grow.

1. Invest 15 Cents Into the Stock Market

Yeah, we know what you’re thinking: 15 cents? How’s that going to do me any good?

Well, that leftover change from your morning coffee and evening grocery hauls could turn into more than $1,000.

That’s what happened when Penny Hoarder reader Jeremy Kolodziej opened an investment account with Acorns. The app’s round-up feature bumps each of your purchases up to the nearest dollar and puts the spare change into the stock market, which helped him mindlessly save $1,076 in about 20 months. 

“It’s a virtual coin jar,” he says. “You don’t even think about it.” He used the spare change to pay for two vacations.

And if you already have a nice stash of money you’re looking to invest? Even better.

Plus, Acorns invested the money for him, allowing him to grow his savings — without studying stock prices or managing trades.

The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.

2. Dodge Bank Fees — and Make Your Money Work for You

You’re right. This isn’t technically an investing option, but if the money you don’t plan to invest is sitting at a brick-and-mortar bank collecting a low interest rate on your savings, it’s time to move your money into the 21st century.

An app called Varo Money combines traditional banking tools with modern technology to help its customers become financially healthy. 

Here’s the best part: Pair your Bank Account with a Varo Savings Account where you’ll earn 2.12%* Annual Percentage Yield (APY) with the opportunity to earn up to 2.80% APY on up to $50,000 in savings. To qualify for the 2.80% rate, you’ll need to have payroll or government direct deposits of $1,000 or more and authorize at least five purchases with your Varo debit card each month.

That’s 31 times — repeat, 31 times — the average savings account, based on a 0.09% average reported by the FDIC.

Varo goes easy on the fees, too. As long as you use one of the more than 55,000 Allpoint® ATMs in its affiliated network across the world, you won’t pay ATM fees. 

Additionally, the minimum balance to open the account is just a penny; you’ll pay no monthly service fees, no minimum balance fees, no foreign transaction fees and no cash replacement fees. You’ll just pay any fees charged by out-of-network ATMs and cash deposit fees if you deposit cash in-store through the Green Dot® Network.

*Varo disclosure: APY is accurate as of January 29, 2019. This rate is variable and may change. No minimum balance required to open account. Balance in savings must be at least $0.01 to earn interest. Deposits are FDIC insured to at least $250,000 through The Bancorp Bank; Member FDIC.

3. Get the Most out of Your 401(k)

Got a 401(k)? You’re on the right track. Now that you’ve got $5,000 worth of wiggle room, increase your contributions to fully capitalize on your employer’s match.

Then,  make sure your 401(k) is doing what you need it to. However, tapping into that account and deciphering the information — or lack thereof — can be hard.

There’s a robo-adviser for that. Blooom, an SEC-registered investment advisory firm, will optimize and monitor your 401(k) for you.

It gives you an initial 401(k) checkup for free, and you’ll get to know your account a little more intimately. Find out if you’re paying too many hidden fees, have the appropriate amount invested in stocks versus bonds — that kind of fun stuff.

After that, the tool is $10 a month to use to continue to monitor your retirement account. Let Blooom know your target retirement age, and it can help you get there by investing more and less aggressively.

4. Open up a Roth IRA

Individual retirement accounts (IRAs) — both traditional and Roth — are a great way to invest your money, especially if you’re planning ahead for retirement.

We like Roth IRAs because you’ll pay taxes on your contributions now. That means, when you tap into your account later in life, you won’t have to worry about losing a chunk of your returns to Uncle Sam.

You can also access your money at any time, so it’s not like it’s locked away behind bars. Yes, if you take your earnings out before you turn 59.5, you’ll pay income tax on them plus a 10% penalty. But you can withdraw — penalty free — up to $10,000 worth of earnings for a first-time home purchase. You also won’t face penalities if you use the funds to pay for college (for yourself, your spouse or your kids).

You can contribute up to $6,000 a year to your account if you’re under 50. And, hey, look! You’ve got $5,000 now, so you’re off to a solid start.

Before you starting aimlessly Googling, we’ve got you covered with information on Roth IRAs and how to choose the best one.

Now you have four solid options to help you start investing that $5,000. It’s time to sit back, relax and watch your money grow!

This article originally appeared on The Penny Hoarder