The Best Investments You Can Make Right Now

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If you’ve come here for hot stock tips, sorry to disappoint: This article is about so much more than that.

The range of best investments includes high-yield savings and cash management accounts, money market mutual funds, CDs, bonds, mutual funds, index funds, ETFs and individual stocks. Picking the very best investment you can make right now — and deciding where to buy your investments — depends on four key factors:

  • Your timeline: Money earmarked for near-term needs should be easily accessible and in a safe and stable investment. For long-term goals you have more leeway to invest in more volatile assets (stocks, mutual funds).
  • Your risk tolerance: The more the risk you’re willing to take by exposing your money to the short-term swings of the stock market, the higher the long-term potential payoff. Spreading your money across different types of investments will smooth out your investment returns.
  • How much money you have: Some investments have minimum balance or initial investment requirements. But there are workarounds and providers that can accommodate most investment budgets if you know where to look. (Don’t worry, we’ll show you.)
  • How much help you need: DIY investors can access many of the investments we recommend below directly by opening a brokerage account — here’s a full guide to brokerage accounts. If you’re not sure which investments are best for your situation, you can hire a low-cost, automated service — called a robo-advisor — to build an investment portfolio for you based on the criteria above. Some short-term investments, like savings accounts, can be opened at a bank.

This list below spans the spectrum of most-to-least stable investments, starting with no-risk bank products and ending with individual stocks:

Savings and cash management accounts

Online savings accounts and cash management accounts provide higher rates of return than you’ll get in a traditional bank savings or checking account. Cash management accounts are like a savings account-checking account hybrid — they may pay interest rates similar to savings accounts, but are typically offered by brokerage firms and may come with debit cards or checks.

Best for: Savings accounts are best for short-term savings or money you need to access only occasionally — think an emergency or vacation fund. Transactions within a savings account are limited to six per month. Cash management accounts offer more flexibility and similar — or in some cases, higher — interest rates.

Where to open a savings account: Due to lower overhead costs, online banks tend to offer higher rates than what you’ll get at traditional banks with physical branches. See our roundup of the best high-yield savings accounts to find one that fits your needs.

Where to open a cash management account: Investment companies and robo-advisors like Betterment and SoFi offer competitive rates (2% and higher) on cash management accounts.

Money market mutual funds

Money market mutual funds are an investment product, not to be confused with money market accounts, which are bank deposit accounts similar to savings accounts. When you invest in a money market fund, your money buys a collection of high-quality, short-term government, bank or corporate debt.

Best for: Money you may need soon that you’re willing to expose to a little more market risk. Investors also use money market funds to hold a portion of their portfolio in a safer investment than stocks, or as a holding pen for money earmarked for future investment.

Where to buy a money market mutual fund: Money market mutual funds can be purchased directly from a mutual fund provider or a bank, but the broadest selection will be available from an online discount brokerage (you’ll need to open a brokerage account).

Certificates of deposit (CDs)

A certificate of deposit (CD) is a federally insured savings account that offers a fixed interest rate for a defined period of time.

Best for: A CD is for money you know you’ll need at a fixed date in the future (e.g., a home down payment or a wedding).

Where to buy CDs: CDs are sold based on term length — one-, three- and five-year terms are common — and the best rates are generally found at online banks and credit unions. See the best CD rates right now based on term length and account minimums.


A bond is a loan to a company or government entity that pays investors a fixed rate of return over a set period of time, typically one to 30 years. Because of that steady stream of payments, bonds are known as a fixed-income security. Although bonds are a relatively safe investment compared with stocks, they are not wholly without investment risk. (For more, see our bond explainer.)

Best for: Almost every investor should have bonds in their portfolio, as bonds are more stable and will cushion the blow during stock market dips.

Where to buy bonds: You can buy individual bonds or bond funds, which hold a variety of bonds to provide diversification, from a broker or directly from the underwriting investment bank or the U.S. government. Our primer on how to buy bonds will help you identify which types to buy and where.

Mutual funds

A mutual fund pools cash from investors to buy stocks, bonds or other assets. Mutual funds offer investors an inexpensive way to diversify — spreading your money across multiple investments — to hedge against any single investment’s losses.

Best for: If you’re saving for retirement or another long-term goal, mutual funds are a convenient way to get exposure to the stock market’s superior investment returns without having to purchase and manage a portfolio of individual stocks. Some funds limit the scope of their investments to companies that fit certain criteria, such as technology companies in the biotech industry or corporations that pay high dividends. That allows you to focus on certain investing niches.

Where to buy mutual funds: Mutual funds are available directly from the companies that manage them, as well as through discount brokerage firms. Almost all of the mutual fund providers we review offer no-transaction-fee mutual funds (which means no commissions) as well as tools to help you pick funds. Be aware that mutual funds typically require a minimum initial investment of anywhere from $500 to thousands of dollars, although some providers will waive the minimum if you agree to set up automatic monthly investments.

Index mutual funds

An index fund is a type of mutual fund that holds the stocks in a particular market index (e.g., the S&P 500 or the Dow Jones Industrial Average). The aim is to provide investment returns equal to the underlying index’s performance, as opposed to an actively managed mutual fund that pays a professional to curate a fund’s holdings.

Best for: Index mutual funds are some of the best investments available for long-term savings goals. In addition to being more cost-effective (due to lower fund management fees), index mutual funds are less volatile than actively managed funds that try to beat the market.

Where to buy index funds: Index funds are available directly from fund providers or through a discount broker. See our post on how to invest in index funds.

Exchange-traded funds

ETFs are like mutual funds in that they pool investor money to buy a collection of securities, providing a single diversified investment. The difference is how they are sold: Investors buy shares of ETFs just like they would buy shares of an individual stock.

Best for: Like index funds and mutual funds, ETFs are a good investment if you have a long-term time horizon. Beyond that, ETFs are ideal for investors who don’t have enough money to meet the minimum investment requirement for a mutual fund because an ETF share price may be lower than a mutual fund minimum.

Where to buy ETFs: ETFs have ticker symbols like stocks and are available through discount brokerages. (See our roundup of best brokers for ETF investing.) Robo-advisors also use ETFs to construct client portfolios.

Individual stocks

A stock represents a share of ownership in a company. Stocks offer the biggest potential return on your investment while exposing your money to the highest level of volatility.

These cautionary words aren’t meant to scare you away from stocks. Rather, they’re meant to guide you toward the diversification that buying a collection of stocks through mutual funds provides, as opposed to buying individually.

Best for: The volatility of individual stocks — and level of difficulty required to create an entire diversified portfolio out of them — means we recommend investors limit their individual stock holdings to 10% or less of their overall portfolio.

Where to buy stocks: The easiest and least expensive way to buy stocks is through an online discount broker. Once you set up and fund an account you’ll choose your order type and become a bona-fide shareholder. Here are step-by-step instructions on how to buy stocks.

Here are some top-rated online brokers we recommend:

This article originally appeared on NerdWallet