5k saved. What would you do

I have 5k saved. What would you do with it?
I'm living free of rent until the near future.
Saving money is always my priority since starting a homestead as a single make in California will be hard. What's your advice to me?

I would invest it in a Vanguard mutual fund.  Everything is super low right now and when the economy rebounds, you will make a great deal of money, and you'll be much further along on your way to buying land or what have you.

Congrats on the savings milestone.

So, with that amount of money, i'd think about how to convert it into money making skills, equipment, or both.

You could perhaps buy a used walk behind tractor and gain experience and income creating gardens for others. Or you could buy what you need to do pastured poultry on someone elses land, paying them out of proceeds or filling their freezer. See Joel salatin's book you can farm.

Or you could go take an onsite pdc course somewhere and learn from people doing what you dream of.

Some examples to get you thinking.

Just depends on what you plan to do in the future. I'd always keep 1k of it liquid in case of emergencies. Otherwise, if you have no current plans I'd do as suggested and invest it, though I'm more of a long term investing sort of gal.

Trace Oswald wrote:I would invest it in a Vanguard mutual fund.  Everything is super low right now and when if the economy rebounds, you will make a great deal of money, and you'll be much further along on your way to buying land or what have you.

The whole economy could also go tits up, in which case you will lose a great deal of money.  Invest in what you know.  If you don't know enough to invest, it's definitely worth it to put in the time to learn.  A couple of pregnant cows should cost less than $5k and cows and calves will almost always be worth something.

Bonzie Durmus wrote:I have 5k saved. What would you do with it?

Nothing. I'd keep it in an FDIC-protected savings account and let it sit. Use it for unexpected expenses instead of accumulating debt (e.g. car repairs, medical bills, etc.), then build it back up.

As long as we've been able to, we've kept 6 months of living expenses in cash, not worrying about lost investment opportunities, just in case something goes wrong.

That could be the 3.5% downpayment need for this homestead
https://www.landwatch.com/Riverside-County-California-House-for-sale/pid/337810436

Timothy Markus wrote:

Trace Oswald wrote:I would invest it in a Vanguard mutual fund.  Everything is super low right now and when if the economy rebounds, you will make a great deal of money, and you'll be much further along on your way to buying land or what have you.

The whole economy could also go tits up, in which case you will lose a great deal of money.  Invest in what you know.  If you don't know enough to invest, it's definitely worth it to put in the time to learn.  A couple of pregnant cows should cost less than $5k and cows and calves will almost always be worth something.

I got the impression that the OP doesn't have land yet. If the economy goes completely to shit, your $5k will be worth nothing, but at every recession some people that believed the economy wouldn't recover spent their money for that very reason. Some wisely, some not. I would bank on the fact that the dollar will almost always be worth something as well. As far as live stock always being worth something, something is relative. I was just listening to a guy on the radio talking about the pork processing plants closing. He used to get $145 a piece for pigs. Now he did he will sell you as many as you want for $5 each. They are already killing thousands of them and burying them because there is no one to process them.  Either way, i don't have an axe to grind.  The OP asked for opinions on what people would do with their money. That's what I do with mine.

If the goal is long-term savings, ultimately for retirement, I'd put it into a Roth IRA and not touch it until you turn 67.

The best long-term investment is a simple Index Fund.  It's been shown that Index Funds out-perform managed funds close to 70% of the time, and thats BEFORE managed funds begin to charge you fees.  With some funds charging upwards of 2% to manage (READ: mismanage) your money, putting your money in such vehicles will cost you thousands of dollars over the long run.  Index funds select their stock purchases simply with a computer.  No manager is necessary, and, as I said above, they consistently beat the pants off of high cost mutual funds.

Here's a great podcast that explains it.

https://freakonomics.com/podcast/stupidest-money/


As said by someone above, now is a great time to buy because the market has been beat-up pretty good with the Covid hysteria.  But long term (a 30-year lineline), it doesn't matter that much when you jump in -- just that you do and then show the patience to stick with it and continue to regularly add to it.

Marco Banks wrote:If the goal is long-term savings, ultimately for retirement, I'd put it into a Roth IRA and not touch it until you turn 67.

The best long-term investment is a simple Index Fund.  It's been shown that Index Funds out-perform managed funds close to 70% of the time, and thats BEFORE managed funds begin to charge you fees.  With some funds charging upwards of 2% to manage (READ: mismanage) your money, putting your money in such vehicles will cost you thousands of dollars over the long run.  Index funds select their stock purchases simply with a computer.  No manager is necessary, and, as I said above, they consistently beat the pants off of high cost mutual funds.

Here's a great podcast that explains it.

https://freakonomics.com/podcast/stupidest-money/


As said by someone above, now is a great time to buy because the market has been beat-up pretty good with the Covid hysteria.  But long term (a 30-year lineline), it doesn't matter that much when you jump in -- just that you do and then show the patience to stick with it and continue to regularly add to it.

I would agree about the high cost mutual funds. The fund I have now charges very nearly zero, and averaged 18 percent over the 9 years i have had it. The interest i have earned is more than the amount i have invested.  There are good investments available but you have to do your research.

Agreed that equity index funds are a great long term passive strategy. However, we're at a really unusual time in history economically. Stock prices are lower than they were BUT corporate earnings and outlooks have tanked. I'd wait a couple months before jumping in. Trying to time the market is a fools game but there's no reason to jump all-in at this most over-valued point in time.

If you don't have other money readily available in savings or an emergency fund I would save it, preferably somewhere it is safe, fully liquid, and earns at least a bit of interest.  Though keeping a portion of it stashed in cash might not be a bad idea either.  As I see it fairly normal sorts of life "emergencies" could chew up 5 grand pretty quick.  I would also be looking and thinking of where to invest as you save more though.

If a person is not ready to buy land, then I would buy food.  With the prediction of raising food cost buying food is a good investment.

If a person doesn't have a freezer, then buy a freezer and stock it with frozen food.

Buy staples like flour, sugar and corn meal.  Buy items that would allow these to be stored safely such as glass jar with tight fitting lids.

Buy a pressure canner and canning jars.  

Buy shelves to store all the staples and canned items.

Learn how to grow food and buy seeds.

I personally would research and follow Dave Ramsey's advice regarding financial peace, but without paying for custom services...I'd just listen to free audio, YouTube, read the website, etc.

Baby Steps website:
https://www.daveramsey.com/dave-ramsey-7-baby-steps?int_cmpgn=no_campaign&int_dept=lampo_split_bu&int_lctn=Ask_Dave-NextSteps&int_fmt=text&int_dscpn=Learn_the_Baby_Steps_Ask_Dave_Next_Steps

Financial Peace Video:
https://youtu.be/h-fcI7W-ucY

Baby Steps summarized/reinterpreted:
1) $1000 Emergency fund
2) Pay off all debt
3) 3-6 months of fully funded emergency fund
4) Investing at 15% of income into retirement
5) College fund for kids--(I'd skip this since no kids)
6) Pay off home early--(For a permie mindset, it's at this point I would find land and build up a homestead in a state with no income tax)

My guess is, with $5000 saved, I'm probably still on step 2 or 3.  So I'd keep on working, budgeting, and saving.  Each day I'd keep my budget in check.

Until step 3 is complete, I personally must try to eliminate as many monthly expenses and vices as possible to save up.  

I'd read Appleseed Permaculture's article on the 8 forms of capital, and figure out which areas of capital I am lacking in, and which I have a surplus in, to see if there is a way I can trade for higher value:
http://www.appleseedpermaculture.com/8-forms-of-capital/

For hobbies and freetime and the occasional celebratory gift to myself, I would look to spend my time/money only on stuff that can help me with both the 3rd Principle and the 3rd Ethic of Permaculture: Obtaining a yield, limiting consumption, and eventually being able to return any surpluses:

 -Gardening: buying seeds, long-lasting tools which are useful to my situation, practicing guerilla gardening/community gardening.

 -Cooking: Raw or bulk dry goods for food for a couple months for "just in case" scenarios, simple kitchen tools, Dutch oven, learning how to do crockpot recipes and preserve food.

 -Permie-hobbies: I'd buy books, or if space is limited, I'd download an eReader app for digital copies.  I'd practice composting.  Maybe I'd try my hand at raising rabbits, guinea pigs,  or laying chickens.

 -Charity to others: especially if it develops my skill sets or any of the 8 forms of capital.

 -Spiritual development: being prepared to meet my maker.

For step 4, there may be dependable companies which have lost significant market capital value as stocks over the past months due to COVID-19, so if all my ducks are in a line, I would buy the dip on stocks which I trust and deem as undervalued and likely to pay good long term dividends....assuming trades are free.

Forgot to list Dave Ramsey's Baby Step 7...

7) Build wealth and give.

Essentially: 3rd Principle + 3rd Ethic

There are too many variables here. You do not mention your age, goals, children, employment etc.  So, with the information available, one way or another, hang on to it.

Nick Neufeld wrote: Trying to time the market is a fools game

This is outhright the best advice so far in this thread when talking about investment. Of course one should buy low and sell high, but it is nearly impossible to correctly pick the low or the high. And I would surely not pick a low now, as the world economy is coming out of the health crisis but probably the true economic crisis has not struck yet to its fullest.

Invest your money once the economy is again in a sustainable uptrend. This goes for index funds too, as they too will dive when it gets worse.

Bonzie Durmus wrote:I have 5k saved. What would you do with it?

Buy a camper and travel around helping Permies until you meet a girl...