OK, so you've got $5,000 burning a hole in your pocket and you're itching to do something with it. Here are some ideas for you.
That $5,000 can give you, your spouse, and kids a nice vacation to remember. If it's just you, perhaps with a significant other, your money will go even further -- and so can you. A one- or two-week trip to Antarctica can cost around $4,000 or $5,000 for a berth in a two-person room. (There will be extra costs involved in getting to the boat, though, among other things.) And you might need a zoom lens for your camera to capture penguin faces better.
Think seriously about investing that money, especially if you're one of the many millions of Americans whose retirement savings are woefully behind schedule. If that $5,000 is invested in a broad-market index 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. That may not seem like much, but 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.
You can do even better than the market's average, though. For help in that mission, consider some of the wonderful mutual funds recommended by analyst Shannon Zimmerman in our Champion Funds newsletter. His Fund of the Month for August sports a 10-year average annual return of 14%. At that rate, $5,000 would turn into $255,000 in 30 years. (That's far from a sure thing, but I just wanted to stress how much of a difference a few percentage points can make.) His pick from the month before is a newer fund that nearly doubled the market's return in its first year and seeks out large-cap growth companies. It's invested in the likes of Medtronic
Try the newsletter free for a month, and you'll be able to access all past issues, plus see which funds Shannon has recommended -- and why. Together, his picks have gained an average of 22% vs. 13% for benchmark indices.
Give it away
I'm serious. You can do a heck of a lot of good in the world if you strategically donate that $5,000. You can even do a lot by just giving $1,000 and spending the remaining $4,000 in other ways. Consider microcredit, for example. If you donate $1,000 to an organization such as the Grameen Foundation USA (which we supported for several years in past Foolanthropy campaigns), it might turn into 10 loans of $100 each to extremely poor women around the world. The money permits each woman to launch her own little business (by buying a goat or a sewing machine or kitchen supplies, for example) and to eventually lift herself and her family out of poverty. These women will then repay the loans (around 95% or more of microcredit loans are repaid), and the money will be loaned out again -- and again and again. Not a bad return on your investment, eh?
Earn an instant 25% return
If you're saddled with credit card debt, you really should pay it off before investing. That's because while you can hope to earn 10% to 15% or a bit more per year on your investments, you may well be forking over 20% to 30% or more per year in interest. If your interest rate is 25% (which is not all that unusual), by paying off $5,000 of debt at that rate, you're saving yourself from having to pay $1,250 in interest this year. Just as an example, late last year, the average default interest rate for credit card debt at JPMorgan Chase
Remodel your home
Spending money on your house will not only often give you pleasure, but it can also give you money -- when you sell. With most remodeling projects, you'll recoup a hefty fraction of what you spent by getting a higher price come sale time. With around $5,000, you may be able to buy a bunch of new windows, or replace the siding on your home, or get your house painted, or get a new roof.
Another option is remodeling yourself. You could go back to school, for example, learning a new skill or even a new profession. At Apollo Group's
So the next time you find yourself with $5,000, think carefully about how to spend it!
Foolanthropy 2006 kicks off Oct. 16 with a call for nominations. Get on our discussion board and nominate your favorite charity.