What to do with $5,000

Got $5,000 burning a hole in your pocket? Just had a windfall? Expecting your tax refund? Lets look at a few ways you might spend your cash and truly benefit in the process.

Earn an instant 20% return

If you're saddled with credit card debt, pay it off before you think about anything else. While you might hope to earn 10% per year on your investments, you could be forking over 20% per year in interest on your credit card. If your interest rate is 20% -- somewhat high, but certainly not unheard of -- paying off $5,000 of debt could save you $1,000 in interest this year.

Pay off some of the mortgage

As above you may like to pay the $5,000 of the mortgage and still keep your loan repayments the same. That way you will pay off the loan earlier

Travel

That $5,000 can give you, your spouse, and kids a nice holiday to remember. If it's just you, perhaps with a significant other, your money will go even further -- and so can you. Fancy a new US$399 AppleiPad, or a US$40 pair of Levi jeans? With the Australian dollar hovering around parity a shopping trip to the United States might be in order.

Give it away

Yes give it to someone who needs it. You can do considerable good by strategically donating that $5,000. Even giving away $1,000 of your stash will make a big positive difference, plus giving you a potential tax deduction to boot.

Renovate your home

Spending money on your house can give you better living now, and more money when you sell. Most renovating projects could see you recoup much of what you spend, by fetching a higher price come sale time.
With around $5,000, you may be able to install solar power (which will reduce your power bills), landscape the garden, get your house painted, or update your bathroom or kitchen. Well some of it.

Improve yourself

If you'd rather not remodel your home, why not remodel yourself? You could learn a new skill or a new profession by going back to school.

These days you can take a course preparing you for anything from a human resources management certification to becoming a forensic nurse, and many of them are available through distance education, if you can't physically get to the classroom.
In short, $5,000 isn't just a bundle of cash. It could be your ticket to a better home, a better nest egg, or even a better life.

Invest it

If you're one of the many millions of people whose retirement savings are woefully behind schedule, investing your windfall could be a truly smart move.

If that $5,000 gets invested in a managed fund and earns the market's historical average (never guaranteed, of course) of around 10% per year, in 30 years it will grow to more than $87,000 (although inflation will reduce the spending power of this amount).

Super charge it.

If you withdraw 4% of that each year in retirement, you'll be getting about $3,500 each year all from a one-time $5,000 investment. Plonk it into your superannuation fund and your money can grow beyond the reach of the taxman.
Accelerate your growth.

If you really want to get clever you could borrow another $5,000 and invest the $10,000 across a few shares. Then of course you receive dividends which would cover the interest payments on the borrowed $5,000 and you would have the growth on the $10,000

So 5,000 isn’t a fortune but careful planning and a simple strategy can really make a difference in the short term and the long term.

Any other ideas for $5,000