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Got some extra cash that you are looking to invest? Here are 15 things to do with your funds!

The Investor

warren buffetImage Source – Isobel Ramona Holmes

1. Put it into an Instant Access Cash ISA

These tend to return around 1.75% pa so you would get an annual return of £87.50. This is a low-risk and low return investment; it would be a good place to hold your emergency fund or to build up some savings for a large investment. Click here for one of many cash instant access ISAs you can choose from.

 

2. Lock it Away in a Fixed-Rate Bond for 5 Years

You can generate around 3.25% on your savings in here. This would give you £867.06 after the 5 year period. This is a safe option to ensure some increased income for the future but remember, if interest rates increase during this time you may be missing out on some big opportunities!

 

3. Invest in Mutual Funds.

You are trusting your money with the decisions of an investment company here so it is important to know that your return can be negative. That being said mutual funds are often a safe option for a passive investor and you could expect returns of around 5% from many UK mutual fund companies.

 

4. Actively Invest your Capital.

Do you research on the stock market. Read some books, talk with other investors and diversify your investment portfolio over a number of stocks and shares. Your return capability here is unlimited. It’s worth noting that you should only be actively investing if you’re sure you know what you are doing as there is a greater possibility of loss.

 

5. Lend through Peer to Peer Lending

Peer to peer lending is where you use a third party to lend your money to a borrower for an agreed rate. This used to be a little risky as your money isn’t insured like it is with banks and ISAs. But now companies like Zopa can guarantee a fixed rate that has a legal safeguard for your cash. You can get a guaranteed yearly return of 4.9% on your investment if you can lock it away for 5 years and if you reinvest your interest for compounding you can gain £1054.87 after tax by dropping the £5000 in here.

 

The Entrepreneur

bransonImage source – Edward Murphy

6. Buy Some Land

Okay, well maybe only a small piece of land. You could turn this into an outdoor car park, a small storage facility, a golf course or any number of outlets. Maybe even somewhere to build your home at a later day? Check out these 49 acres for £5000 per acre!

 

7. Buy a Website

Online real estate has seen enormous growth with many high authority sites providing enough active income for webmasters to quit their jobs. If you are handy with web design and can tell a good backlink profile from a poor one you can often pick up one of these high authority sites for around £5000. Flippa is a great place for you to find these deals.

 

8. Put a 5% Deposit on a Mortgage

With £5000 you can now get a deposit on a £100,000 house through the Help to Buy scheme. This could be your first home or a potential rental property. I certainly do not advocate 5% mortgages due to the HUGE interest that comes with them but maybe you can find a real deal out there on the property market.

 

9. Create A Garden Service Business

A rake, a shovel, some shears, a wheelbarrow and some printed fliers. £10 to the boy next door to deliver the fliers around your neighborhood and there you have it; you’ve built a new garden service business. This is a very quick and easy business to start up where there is always demand from those busy folk with their overgrown gardens. Requires minimum investment and can provide you with a great return if you put the legwork in.

 

10. Become a Business Angel

Make a mix of your investment knowledge and entrepreneurial flair. If you feel you can spot a good business in it’s early stages you can make enormous returns on investment by buying equity in a startup. There are a number of online platforms where you can find new businesses to invest in, some of which offer moneyback guarantee. You would typically invest a little more than £5000 to get a good amount of equity in a company. However, if you keep your eyes peeled I imagine you could probably gain 5% equity in a small profitable start up with a £5000 investment. Check out some examples of funded campaigns here.

The Explorer

explorerImage Source – childofthewhimsical

11. Backpack Across the US

See Chicago, be dazzled by the Grand Canyon and admire Miami. The states has a vast landscape and once you’re there you can get around for some time on the cheap. If you plan in advance, tickets to the states can cost you around £300 and with a strict budget you could be looking at just $60 a day including transport and accommodation. See Nomadic Matt’s Guide to backpacking across USA. The disciplined budgetters out there could probably survive for almost 4 months providing they could grab a temporary visa.

 

12. Buy a Boat

Embrace the sailor in you! Granted, you may not be able to find yourself Captain of the Flying Dutchman at this price but you could get yourself a good deal on a secondhand yacht. Pimp it into a party boat or take it for a quiet weekend fishing trip.

 

13. Travel Australia

Take a walk on the wild side! A little more costly than a trip to the states, tickets to Australia will set you back around £500 if you plan well in advance. Unless you have friends or family out there, expect to be paying around $130 a day on accommodation, food and entertainment. Click here to find out a little more about the cost of traveling oz.

The Big Spender

big spenderImage Source – Aubs Photos

14. Drink one bottle of Perrier-Jouet Champagne

Retailing at $7000 per bottle; this is speedy way to guzzle your small fortune!

 

15. Spend 4 Nights at ‘The Point, Saranac Lake Hotel’ in New York

the_point_new_york_l

At just $1848 per night, you could have an expensive break in a ranch hidden away in New York. A cosy option for our overpaid popstars or those with a little more money than sense.

What about me?

A couple of years back I had a cash sum of £5000. I took three months out and booked tickets to New York with 3 friends. We spent a few days seeing the amazing landmarks of NY and experiencing a culture that is beautifully different to the UK. We flew to Miami and found a reasonably priced house share near Miami Beach where we lived for three months with two pugs and a french bulldog. Amazing weather, fantastic food and a beautiful beach; once you’ve had a taste of luxury you don’t stop searching for a way to have this forever.

This was a quick way to turn £5000 into £0, but I wouldn’t change it for the world. Travelling for that period of time gave me a real taste of what I’d love to do in the future. If I could become financially independent or even just work from my laptop I would love to spend time travelling from country to country (especially the states!).

There are million other options out there for you to invest or splurge your capital on. What would you do if you had an extra £5000 spare?

28 COMMENTS

  1. Lots of nice ideas! I’d go for investing or travel, although I just used a similar amount to buy a car, and ship it from the US to Guatemala. Dropping it on a bottle of champagne, even if I had millions, I don’t think I would.

  2. I love so many of these ideas! Backpacking – yes! Buying websites – yes! Peer to peer lending – yes! These are all things I want to do for sure, although I did backpacking my college days and it prob wont be convenient with the two kids I have on the way haha. Going to promote this post for ya! 🙂

    • Thanks Cat, I’m not too sure about peer to peer yet, the returns look good though!
      Where did you go backpacking? I’m sure you’ll still be exploring when they’re a little older!
      Thanks for sharing 🙂

  3. I invested 4,500 in a new Business so now I am my own boss! A small price to pay for freedom and I am loving the challenge. The best thing I have done!

    • It’s great that you ‘made the jump’; that must be the hardest part; I’d love to do it one day! I guess it’s just scaling up the side hustles from now on 🙂

  4. woohoo, another UK blogger who is also a recent graduate! just found your website tonight… love it!

    By the by, I was recently doing a search for cash ISAs (or should that be NISAs?) on moneysupermarket and it reckoned Newcastle BS would offer 2.75% for theirs. The catch was that I think you had to have an interview about buying a house when you want to withdraw the money, as it is meant to be an account for saving up your first deposit.

  5. I would just take it and invest it a high quality dividend growth stock or two. Collect the dividends, reinvest and let the magic of time and compounding do its thing. Thanks for sharing.

  6. Ive invested £10,000 into a fixed 7 year bond with skipton at 3% interest which will give me about £2,700
    the only downside is that now I need the money amd they wont let me have it unless Im bankrupt

    • Sorry to hear that Charlie, I think I’m more inclined towards peer to peer lending at the moment which is averaging out at 6% returns which you receive back at the end of each year. The downside is that this investment is not insured, however your funds are spread out across a large number of loans which greatly reduces risk. The 6% also takes this likelihood of ‘bad debt’ into account.

  7. I’ve read all the possibilities, but still not seen anything that really fires me up!
    £5,000 is not a world changing sum, I know, so maybe it would be best spent on a memorable journey, or a work of art, perhaps?
    I am still open to ideas, so please help.

    • Looks like I’ll have to come up with some more ideas!
      How about taking a break from work and starting a business full-time, then using the £5000 to pay your own salary for a few months whilst things pick up?

  8. I’d split the £5k into different investments – why put all eggs in the same basket? So a bit in the cash ISA, a bit in cheap tracker funds and if I wasn’t already invested in peer to peer, some in that. If you’re willing to take a bit more risk with p2p, you can get 10%+ with Funding Circle. As your money is spread across lots of different companies (I’m currently loaning to >20 companies), if one were to default, it’s just a small amount that’s is likely to be lost and in most events, the p2p company has provisions to cover for losses.

  9. Great idea for an article Joe!

    We did the backpacking thing in ’08 – Road trip across USA and then bus’d our way round S.America. Was awesome!
    Although I think we spent a little more than £5k each it was totally worth it.

    If I had more money back then I would have kept it going for longer or done another trip but as I’ve gotten older the travel bug seems to have left me somewhat, so now I am looking to use any spare cash to buy my freedom instead.

    Cheers!

  10. Awesome ideas!! I would absolutely LOVE to travel and I think right now (being in my 20’s) would be the best time to. However, if i had the money I do believe I would save it to pay off my college debt. This was also very informative for me, learning about the different types of bonds and other ways to get investments. I’ll definitely keep these in mind, thanks!!

  11. Brilliant article Joe, thanks. Any more ideas??? I will be researching some of these options…particularly interested in setting up a business so any more info on this would be good….I did the whole travelling thing way back in the day!

    • Hi Jo,
      Thanks for stopping by! The biggest investment in setting up a business is by far the time investment at the beginning- having some savings to cover the cost of living for a few months whilst you get things off the ground is certainly handy!

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