I recently saw this article on CNNmoney about what you should do with 10,000 right now. They have this question for those of you that are loaded (What to do with 50k) and those of you that are itching to torch that emergency fund (what to do with 1k). Some of the entries sounded a bit frivilous (at least for me) but I could see the value in a lot of them. First, they mention that because of the tough economic times, people have a lot of cash squirreled away right now (I really don’t know if that’s accurate), but here is the list:
- Buy Museum Quality Art – Yes, the art market has taken a beating, and yes you’ll probably be able to get some good deals and could turn them into “investments”. On the other hand, you’d have to take care of it and look at it all the time. For me, I wouldn’t drop 10k here.
- Do Some Good – They suggest donating it to a charity as well. I think if I had no debts and was stable in my financial situation, I’d definitely consider this. For me personally, I’d like the money to stay in my community so I’d pick a local charity, but any charity that you identify with would be great.
- Invest in Stocks – They specifically mention blue chips like Utilities and Telecom because they are necessities in this day and age. I agree, and typically these stocks pay dividends and are reasonably priced (AT&T/Verizon are, anyway).
- Build a T-Bill Ladder – Also, a good idea to watch your money grow. You simply buy 5 $2,000 dollar t-bills: one for 1 year, one for 2 years, one for 3 years, one for 4 years and one for 5 years. Once each one matures, use your principal + interest to buy a 5 year note. In 5 years, you’ll have a bill maturing every year.
- Buy a Target Date Retirement Fund – Great Idea. Make sure to keep the fees low, and you’ll be set with cash when you’re ready to play bridge all day.
- Play a Hunch – This is essentially betting a portion of your portfolio (keep it small people, 5-7% max) on an area you believe will grow quickly. Emerging foreign markets? Basket weaving supplies? Red (on the roulette wheel)(Just kidding). Play the hunch with your 10k. You could end up a winner!
- Pay off your kid – Also a great option. Offer to get your kid set up in an apartment (preferably as far from you as possible) and pay the security deposit and some rent. Slip the youngster the rest in c-notes and tell him not to spend it all in 1 place. Use the remaining money to build a man cave.
- Grab some tax credits – Great Idea. Lower your energy bills by replacing windows, adding more insulation, installing a programmable thermostat. These will help you use less energy, live greener and save some good money in the winter!
- Buy Growth Stocks – Good option.
- Put it in your IRA – If you’re married, you’ll have enough to max out your spouse’s IRA as well.
Unfortunately for me, I’d probably use the money to pay down debt. I may take a bit out (500-1000) and use it to go on vacation, but I may not. However, if I didn’t have to do that, I’d probably go for the energy tax credits first. There’s always more you can to to conserve energy (or generate it) in your own home.
What’s the Best on this list? The Worst?
What would you do with the money?