HOW WOULD YOU INVEST $5,000 DOLLARS? IN A WAY THAT YOU KNOW YOU WILL SEE A PROFIT?

The only way to KNOW you will see a profit is to put the money in an FDIC insured CD, or some form of treasury certificate. Anything else will involve a risk that you will lose some of your principal. That risk might be small, but it will exist.

Certainty (“know”) and return (“profit”) are inversely related: the more you have of one, the less you have of the other.

Or said another way, the higher the return offered the more likely it is that you will lose some or all of your initial investment.

Certainty will get you between 2 and 5% per year for up to 5 years.

A high return requires risk — risk of loss and risk of volatility (your investment may be worth more at the end but less at various point between now and the end).

Diversified investments in stocks will get you between 7% and 12% per year over periods of 10 to 20 years.

Let’s see, 5,000, so if I picked 5 companies for some modicum of diversification then I would spend $1,000 on each.

Compass Minerals (CMP) recently closed at 53.63, so if I bought 18 shares, costing $965.34 (plus $7 commission at Scottrade), then that would be $972.34. What I get is a piece of a company that went from 857 M for sales in 2007 to 1.167 B for sales in 2008. Profit from that went from 80 M in 2007 to 159 M in 2008. Equity grew from a negative number (-4.6 M) to 64.5 M in 2008 (113 M after the first quarter of 2009). If they can keep this up then I will do well.

OSI Pharmaceutical (OSIP) recently closed at 33.80, so if I bought 29 shares, with $7 commission, that would be $987.20. OSIP had 341 M in sales for 2007 and 471 M in sales for 2008. Equity grew from 138 M to 571 M. which sounds pretty good to me. Their “Saturn” study seems to be doing pretty good in their phase III trials, which is to say that if it finishes up well they have a helpful liver cancer drug, which also sounds pretty good to me.

TiVo (TIVO) is an interesting technology play. The fiscal 2008 sales were an uneventful 272 M and in the fiscal 2009 an even less impressive 249 M. While that might stop me right there, the profits went from -31 M in fiscal 2008 to +103 M in fiscal 2009. During that time the equity moved from 16 M to 154 M. If Comcast ever gets around to buying them out then there might be a sweet trade up in shares. TIVO recently closed at $7, so with commission, you could buy 141 shares costing $994.00.

Frontline, Ltd. (FRO) recently closed at $23.38, so you could get 42 shares, using another $988.96. I’ll let you check out why.

Colgate-Palmolive (CL) is not quite as rosy as the others, but they do a really big book of business. Buying 15 shares will add $996.25 to your basis costs.

If my arithmetic is correct, then you will have close to $4,938.75 (exact numbers will depend on prices when you buy), leaving some 61.25 in cash in your brokerage. If you buy the bigger priced items first then you might buy a few more shares of some of the cheaper stocks.

Buying one share of each as a package unit instead, will cost (not counting commissions) $183.76 at these prices. For this the dividends (not all will pay a dividend) would be about $11.25, a yield of about 6 percent. You could buy about 27 such units, commission costing $35, so you would have about $3 and change left on account and get something around $303 in dividends over the next year.

blue chip stocks – MSFT, ORCL even GILD

Check this website out, as it gives quality recommendations:
http://alpha-investing.com/

You NEVER know that you’ll see a profit. If that were so everyone would be rich. Profit is associated with risk…more risk means more profit and vice a versa. However, to answer your question:

I’d avoid the stock market (too risky) for now along with bank instruments (poor yields). I’d consider investing peer to peer lending instead. Basically you lend money to borrowers through a peer lending company and earn interest, just like a bank does. These days, with banks not lending money so readily, there are lots of people looking to borrow money. I’ve been a lender for 2 years and earned a solid 18% return. That sure beats the stock market.

A thorough explanation can be found here:

http://www.moneyscrounger.com/investing/peer-to-peer-lending/