For short-term investments, it is recommended to put money in a CD (certificate of deposit), notes U.S. News & World Report. The money cannot be touched for a certain amount of time.Continue Reading
CDs, saving accounts or money market accounts are the best option if the money will be needed in the near future. Greg McBride, chief financial analyst of Bankrate, claims online saving accounts are the best choice if the money will be needed quickly. CDs cannot be touched for a period of time without losing part of the investment. Money market accounts are similar to CDs but do not have the same high interest rates.
For long-term investing, managed mutual funds and ETFs (exchange-traded fund) are the way to go. A financial manager handles the investment when using a managed mutual fund. This means the investor does not have to make all of the decisions. In addition, the investment can be spread over a variety of stocks so all the money is not lost at once. ETFs are almost the same. Merrill Edge financial solutions advisor, Paul Granucci, explains "The difference is how they are managed." The risk of losing money is greater but the cost to invest is lower. Portfolios should be re-balanced yearly for both of these choices.
Before investing money, it is better to make sure it is not needed elsewhere. Outstanding debts should be paid off and a rainy day fund should be set up in case an emergency arises. This fund should have six months' worth of living expenses.Learn more about Investing