There are many ways of spending $5000, but there are as many ways of saving it. In these cash-stricken times, it will be great if you resist the temptation of splurging this money on shopping or on a vacation. Saving or investing this money can reap great dividends in the future. You can consider the options mentioned below to make an investment. 1. Savings Account Are you someone who for too long has justified his hand-to-mouth lifestyle? If yes, won't it be a nice idea to put that money in a bank that offers you a good interest rate. Conventional wisdom tells us that one should have at least three months of living expenditure in savings, and the $5K you have now can be the first step towards achieving it. Having your money in the bank will also give you the confidence that you have something to fall back on during difficult times. However, if you are looking to save money for your retirement or any other long-term plan, the interest rate offered on a savings account will not be able to take care of the inflation. The interest rate has been dipping since 2011 and the trend has continued this year as well. Even internet banks have not been able to offer attractive interest rates. However, if you want to settle for a steady growth on your investment without taking any risks, a savings account is the option for you. Annual Percentage Yield - 0.65% to 1.01% 2. Credit Card Debt Ask any average American about his credit card debit and melancholy will invade him. Credit cards are ubiquitous, so are credit card debts. If you are strolling in the downtown, armed with a credit card and something exciting catches your eye, chances are there will be another addition to your credit card statement. $5000 can take care of these impulse-driven purchases and take a little burden off the interest that so quickly accumulates on a credit card debt. Many people may think that paying off a debt isn't the same thing as investing, but instead of chasing a savings account which pays you an annual interest of 1%, isn't it better to get the monkey off your back by clearing a credit card debt where you are charged in excess of 13%? The money that you will be saving because of this reduction in the monthly installment can then be used for other investment purposes. 3. Bonds Bonds are considered one of the best investment options for people who want to earn decent returns, without taking too much risk. Although, like stocks, bonds too are subject to market risks, the danger is curtailed as these are diversified over a number of segments. So, if you are planning to save funds for your retirement or any other expenditure in the long term, bonds can be an option you can consider. 4. Gold Many think of gold as an inflation hedge. During the worst times of 2008, gold was least affected, and even rose by 4.3%. There are many ways in which you can put your $5000 in gold. You can directly buy gold bullion coins or you can invest in stocks of gold-mining firms. As an alternative, you can also trade in Gold ETFs. But, you also need to know that it isn't all roses when it comes to investing in gold. For bullion coins, you need to pay a premium and you will also incur charges on keeping the coins in a safe. Stocks of gold-mining firms aren't always in sync with the actual price of gold. What it means is that if the gold prices fall by 1%, you can see a drop of, say, 4% in the stock value. The fund managers of the ETF will charge you a brokerage, and the cost of keeping the ETF running will also be charged to you. Despite all these cuts, gold still is considered a relatively low-risk investment option and you can definitely consider investing your money in it. 5. Stocks and Mutual Funds Stock markets have been known to pay big returns, but the associated risk is also bigger. $5000 may not be sufficient for making a big investment, but you always have the option of diversifying your portfolio. If you are a novice, do hire a broker to manage your investments. But if you are someone who thinks investing in equity is too risky, you will be better off pooling your money into a mutual fund. There are some things that you should keep in mind while choosing a mutual fund. Check the history of the fund - whether it has provided benefits on a long-term basis or is it a fluke. Also, funds are subject to taxing by the government and you should carefully select ones which avoid rapid trading. 6. Education Many may be surprised to see education on this list, but as research has found out that people with an MBA or a certification earn substantially more than those with a diploma or a bachelor's degree, investing in education will mean that you get better job offers and this can give you lifelong returns. If you are a parent, you might consider saving this $5K for your child's education. You can put this money in a 529 plan which will secure your child's education. Note : The options that are provided here are influenced by government policies and market trends. Therefore, it is advised that you exercise caution before investing.