How I'd invest that cash and how you might invest that cash could be very different.
If you were a day trader, you might go off and buy some CFDs, warrants or trade in an out of several stocks in the hope of generating a capital gain.
On the other hand, if you were retired and dependent on your super for income, you'd most likely stick a $5,000 windfall into the bank first. But with bank accounts offering measly interest rates, a better might be some high dividend yielding stocks on the ASX.
If you were new to the stock market, a prudent investment would be to say buy $5,000 worth of shares in one of largest and best listed investment companies Australian Foundation Investment Co.Ltd. (ASX: AFI). That would give you instant diversity at a low cost – and a very low chance of losing all your cash – all the while earning a decent 4.2% fully franked dividend.
Here's how I'd invest it given I don't fall into any of the above categories and if I was just starting to build a portfolio…
$1,000 each into mortgage broker Australian Finance Group Ltd (ASX: AFG) and home builder Tamawood Limited (ASX: TWD) for their juicy fully franked dividend yields of around 7%.
Another $1,000 would go into serviced office provider Servcorp Limited (ASX: SRV) and another $1,000 into franchisor Retail Food Group Limited (ASX: RFG) to provide generous growth and some income in the form of dividends.
For my final $1,000, I'd go with the Vanguard MSCI Index International Shares ETF (ASX: VGS), which gives me exposure to more than 1,500 of the largest companies in the world, including Apple, Alphabet (Google's parent), Amazon, GE and Nestle.
Foolish takeaway
For $5,000, that gives a nice mix of income, growth and international exposure and a good starting point for a portfolio.
