How can I get 5,000 quickly
Invest € 5,000: Tips on the best investments
Lana Iliev, November 6th, 2020
Investing 5,000 euros is currently not that easy: The zero interest rate policy of the ECB makes the interest income that is available on safe investment products such as the classic savings book look almost ridiculous. Today, investors need a well thought-out strategy in order to optimally invest their capital and, for example, to achieve financial freedom. Read in this article how you can start building up a fortune with 5,000 euros.
Pay off debts and have nest egg ready
The first and most sensible step to use your 5,000 euros is to pay off existing debts and to set aside a nest egg. You should only invest the amount that is left after these two measures.
Invest € 5,000 easily, free of charge and with high returns
Invest 5,000 euros correctly
5,000 euros can be invested in a wide variety of ways. Which is the ideal path for you depends on your individual preferences. Therefore, ask yourself the following questions:
|Return||How much return do I want to receive?|
|risk||How high can the risk be that I take?|
|Investment horizon||How long would I (or can) do without the invested amount of 5,000 euros?|
You can read here how you can develop an individual strategy and answer these questions for yourself: Investing money
Don't blindly rely on bank advisors!
A consultation can be informative, but ultimately bank advisors are often more interested in optimizing their own commissions and not your portfolio.
Invest 5,000 euros for a short time
If you need your 5,000 euros within the next five years, you should opt for a short-term and flexible investment so that you are liquid (“liquid”).
| Call money or fixed-term money
You can access a call money account at any time. There are also fixed deposit accounts with relatively short terms such as one or two years. In addition, your money is protected by the statutory deposit insurance.
But high flexibility and security have their price: the interest on overnight and fixed-term deposits is currently underground. In case of doubt, this means that the inflation rate exceeds your interest income. If so, the real value of your money will decrease as purchasing power declines. In other words, instead of adding 5,000 euros, you are effectively losing money in such a case.
| Precious metals
An investment in precious metals, on the other hand, is considered inflation-protected and crisis-proof. Investors buy gold, silver or platinum, for example. Precious metals are subject to fluctuations in value, but they also offer more security because they are real assets.
Whether an investment in precious metals brings value growth depends, however, on whether the value of the metal (e.g. the gold price) at the time of sale is higher than the value at the time of purchase. Such a development is difficult to predict. For this reason, professionals, for example, usually only buy gold as a small safety buffer.
| Real estate crowdinvesting
In contrast to crowdfunding, with crowdinvesting a fixed interest rate is agreed over the investment period. For example, on BERGFÜRST, the platform for digital real estate investments, investors receive between 5.0% and 7.0% interest per year with a project duration between one and five years. Investors can, however, offer the units for sale at any time on the trading venue, the secondary market on BERGFÜRST, or purchase more.
Real estate crowdinvesting means that a large group of private investors come together via an online platform to jointly invest in a real estate project. Only professional project developers collect money for their projects through BERGFÜRST.
However, the risk of a total loss is higher with crowd investing than with a call money account, for example, since the investment is not covered by deposit protection. However, since you can invest in BERGFÜRST from as little as € 10, spreading the money over several projects is easy to implement. This is how you spread the risk over several shoulders.
Another possibility to invest 5,000 euros in the short term are so-called P2P loans. Private individuals grant loans to other private individuals and receive interest in return. This process is also known as crowdlending and carries high risks for inexperienced investors.
Invest now € 5,000 free of charge and with high returns
Invest 5,000 euros in the long term
If you want to invest 5,000 euros for a period longer than five years, an investment on the stock exchange is a good idea. Although capital investments are riskier here and are subject to fluctuations in value, these can be balanced out in the long term. In addition, the return on the stock market can be a lot higher than with other investments. However, there is also the risk of high losses and total loss.
| Buy stocks
Remember that you should invest at least 1,000 euros in individual stocks. Smaller amounts are not advisable as the order fees have to be generated through the return. With this approach, you can purchase securities from five different stock corporations with 5,000 euros. However, you have not achieved a particularly high level of risk diversification. In contrast, a DAX ETF contains, for example, 30 stocks.
ETFs (Exchange Traded Funds) are index-based equity funds that enable investors to invest in stocks in a diversified manner, even with low minimum investment volumes. Since ETFs are passively managed, investors also benefit from comparatively low costs, which in turn has a positive effect on returns.
When investing in ETFs, you should pay attention to these three stock exchange rules:
Spread any risks by setting up your portfolio broadly and using different ETFs. With 5,000 euros, for example, you can invest in the German share index with a DAX-based ETF as well as in a global market with an MSCI World index fund. In this way you achieve a good regional spread and reduce the risk of loss.
Ideally, you buy shares in ETFs when the stock market is down, i.e. when they are comparatively cheap. However, this point in time is difficult to estimate. Therefore, it is advisable not to invest everything at the same time, but to split the sum and invest money over months. In this way you buy both expensive and cheap and there is a high probability that you will achieve a good average price. You can realize this so-called average cost effect with a savings plan.
Strong nerves are important in the stock market. You must not let yourself be unsettled by falling prices and sell at a badly chosen time. If this emotional roller coaster ride isn't for you, consider alternatives with a fixed rate of return like real estate crowdinvesting.
Invest € 5,000 easily, free of charge and with high returns
Invest 5,000 euros: 3 pieces of advice
1 | The better the return, the faster you can multiply 5,000 euros
This point is of course obvious: the better the return or interest, the easier and faster it is to increase or even double money.
As a rule, higher risks have to be accepted in order to benefit from attractive returns. But these can be mitigated with a well thought-out risk diversification.
2 | Mix investment forms
If you want to invest in the long term, it is worthwhile to mix different investments in order to build up a balanced portfolio. Invest in different asset classes such as securities, real estate and savings. This gives you the best possible risk diversification for your capital investment.
Even with 5,000 euros, it is possible to invest in several asset classes. However, it is important to have a low minimum investment volume so that you can include as many investments as possible in your portfolio. At BERGFÜRST, for example, you can invest in real estate projects from as little as € 10.
3 | Save taxes
Bear in mind that investors have an annual savings lump sum that is not taxable. You can often assert this directly with an exemption application (and not only with your tax return). In this way you save taxes directly and have more money to invest.
Any questions? You can find answers here
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