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What are some good things to invest in?

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Quick Answer

Some good things to invest in include online savings accounts and certificates of deposit for the short term. Mutual funds and exchange-traded funds are good investments for the long term.

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Full Answer

Online savings accounts are good short-term investments because the investor can withdraw his money without penalties. Although they have a low interest rate of around 1 percent, they pay some of the best returns compared to savings accounts that brick-and-mortar banks offer.

CDs are low-risk secure investments. They are insured and have a similar rate of return to online savings accounts, but the investor cannot withdraw money from a CD without penalties until the maturity date. The downside of low-return investments is that they may not keep up with the rate of inflation.

An index fund, a type of mutual fund, has a portfolio built to match the components of a market index. Index funds are a type of passive investment, meaning that it has low operating fees. Index funds are unlikely to beat the market returns, but they perform better than most mutual funds by keeping up with the market.

ETFs are similar to mutual funds in that one share is made up of many different investments. However, unlike mutual funds, they trade like common stocks. Like stocks, their price fluctuates throughout the day. They also have a lower cost than mutual funds and don't require a minimum investment, which is as high as $3,000 for some mutual funds.

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