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If you already have a good computer, that much money could outfit an entire home music recording studio with decent gear, especially if you buy good used gear, which is easily available:
A couple of good super-budget guitars from Harley Benton (a Strat clone and a Les Paul clone), for about $300 (new).
A good Yamaha acoustic guitar, $100.
A bass, $75.
An interface, to get the music into the computer, $50.
A basic MIDI controller, $30.
A good electronic keyboard with weighted keys, $100.
Microphone, $75.
Headphones, $50.
Electronic drum machine, $50, or use the pads on the MIDI controller, or voices on the keyboard.
DAW - Reaper is free, and works great.
That's approximately what I spent on my studio, and everything works great, and sounds terrific..