Best Places to Invest Money

Updated May 2, 2018
Putting Coins In Jars

Often the best place to invest money is in long-term accounts that will earn interest over time. The benefit of investing this way comes from compound interest. Consider your options and your financial goals as you research the best places to invest money.

1. Employer-Sponsored Plan Offering a Match

An employer-sponsored retirement plan, either a 401(k) or a 403(b), is one of the best investment options. The biggest tax advantage is the fact that pre-tax dollars are invested. Many companies also match a certain percentage of the funds that you invest, which means more money going into your account tax-free. Most 401(k) and 403(b) plans also allow you to control your investments, although they may limit the mutual funds you can choose from.

2. Roth IRA

If you maxed out your 401K contribution, a Roth IRA is an excellent choice, according to Kiplinger. Money is taxed prior to being invested, but the funds grow tax free. You also have more options in terms of which stocks, bonds and other investments you buy into. The maximum amount per year you can contribute to a Roth IRA is $5,500 under the age of 50 and $6,500 if you are older. However, this amount includes contributions to traditional IRAs as well.


3. Traditional IRAs

For those who have an income above the Roth IRA limits, consider a Traditional IRA. Currently, the ability to invest in Roth IRAs begins to phase out for those who have a modified adjusted gross income of $63,000 for a single person or $101,000 for a married couple filing jointly. Your contribution limit is $5,500 to $6,500 based on your age and this includes money going into Roth IRAs. A Traditional IRA is desirable because it allows you to put money away long term and reduce your current taxable income. The funds are taxed as regular income when you withdraw them at retirement.

4. Mutual Funds

Mutual funds are a good choice if you want to enter the stock market but aren't sure how to start. A mutual fund is managed by an investment firm and includes many stocks and bonds in one "pool" of money. You still need to do some homework to find the right mutual fund for you but many investment firms provide information on the type of risk for each fund along with a full prospectus and can help you decide which is the best choice for your short- and long-term needs.

5. Stocks

New York Stock Exchange

Forbes says another top option for investing your money is in the stock market. The stock market can fluctuate with highs and lows throughout the life of a stock and you need to do your research to make sound choices. If you want to start in the stock market but don't know how, spend time doing research to understand the process first. You can also hire a professional investor to help you make good decisions. You'll have to pay commissions and stocks are taxable but if you make the right picks the payoff to your investment portfolio can be significant.


6. Bonds

Bonds are a solid way to go with additional investment money, says U.S. News and World Reports. They are safe and add a good bit of protection to your portfolio even though the yield is rather low. However, security may be more important to you, depending on current economic conditions.

7. High-Yield Savings Accounts

Another smart option that is easy to do is to find a high yield savings account. There are several online banks that offer excellent rates that may be higher than what's available at local banks. Compare companies to find the best interest rate possible. These banks do offer federal deposit insurance, which means your investment is covered and protected up to $250,000. Interest rates fluctuate over time, but they earn solidly with very little, if any, risk.

8. Real Estate

According to Entrepreneur, putting your money into real estate is a great investment because you can yield excellent returns and tax benefits. The only way to do so, though, is to think long term. If the investment will be for the long haul, such as a rental property or a first or second home, then your money is likely safe and will grow over time. Housing values can fluctuate over time based on economic conditions, so you want to be aware of this when pricing out your market.


9. Precious Metals

currency on financial newspaper

A form of investing that you may have seen TV commercials on is buying precious metals like gold and silver. This shouldn't be among your first choices for investing but if you have some funds to spare and have a shorter investment time frame, it can be an additional good way to diversify your portfolio. Another option is to buy a precious metal ETF, which is similar to buying stocks.

10. Pay Off Debt

Both billionaire Mark Cuban and Forbes say one of the best ways to invest your money is to pay off any debts that you have. If you sit down and calculate what you pay on interest on your debts each year, and compare that to potential gains on an investment, removing the debt from your life can often be the clear choice. Paying debt off faster will also free up your regularly available funds allowing to have even more money available in the future for investments.

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Best Places to Invest Money