Best Way to Invest Money [2024] How to Invest, Best Ways

What does it take to be financially healthy? For lots of people, the answer is investing.

When you invest your money, you’re not just setting it aside for the future. You’re also helping it grow. That’s probably why 61% of Americans have at least some money invested in the stock market.

In this article, I’ll explain some popular types of investments. That way, you can decide which is the best way to invest money for someone in your situation. 

Best Ways to Invest Money

Before deciding the best way to invest money, you need to ask yourself two questions:

1. What’s my financial situation?
2. What are my financial goals?

These questions will help you decide your risk tolerance. 

If you’ve got plenty of savings and you’re hoping to significantly grow your wealth, then a high-risk, high-reward investment could be in order. But if you’ve only got a small amount of savings that you can’t afford to lose, then you need to choose something safer. 

With that in mind, here are some of the best investment opportunities available. 

High-Yield Savings Account (HYSA)

Best for: Avoiding risk

A high-yield savings account (HYSA) is the best way to invest money if you want to completely eliminate risk while maintaining access to your funds.

A HYSA is a savings account with a higher-than-normal interest rate, and most are FDIC-insured. That means the federal government guarantees the first $250,000 in the account. In other words, you literally can’t lose your money!

HYSA’s are also designed for easy access. You should be able to transfer funds from your HYSA to a checking account with just a few clicks. 

One great example of a HYSA is the Upgrade Premier Savings account. Currently, it offers up to 5.07% annual percentage yield (APY) – meaning that’s how much your money would grow in a year (rate valid at the time of this publication). 

Another option is the CIT Bank Platinum Savings, which offers a 5.05% APY on balances of $5,000 and over (rate valid at the time of this publication). 

To learn more about your choices, check out this review of the best savings accounts with 5% interest. 

And if you’d like to boost your bank balance quickly, check out these banks with immediate sign-up bonus.

Pros	Cons
There’s usually no risk (because most balances are FDIC-insured up to $250,000).	Returns are lower than what you can get with riskier investments.
You can access your money at any time.	If interest rates fall nationwide, HYSAs will start earning less.
You can earn over 5% APY in the current high-interest climate.

Certificate of Deposit (CD)

Best for: Maximizing risk-free returns

A certificate of deposit (CD) is the best way to invest money safely if you can afford to lose immediate access to your money.

With a CD, you give your money to a bank or credit union for an agreed-upon amount of time. You’re meant to leave the money untouched until this “term” is over. If you withdraw money early, you’ll most likely have to pay a penalty.

So why get a CD when you could just put your money in a savings account and maintain constant access?

There are two main reasons to go for a CD:

1. The interest rates are often higher than they are for savings accounts.
2. The interest rates are “fixed,” which means they don’t change in response to market conditions. 

Most CDs are FDIC-insured, so unless you deposit more than $250,000, your money will be safe. 

Banks often offer a wide variety of CDs, and each term length will have its own APY. For example, CIT Bank offers CDs with terms between 6 months and 5 years, and the highest-paying option is the 6-month term, which pays a hefty 5.00% APY (rate valid at the time of this publication).

There are also “jumbo” CDs, which have large minimum deposits but tend to offer even higher returns. Do you have enough in savings to deposit a few thousand dollars or more? If so, check out this list of the best jumbo CDs.  

Pros	Cons
Interest rates are often high (for a risk-free investment).	You lose access to your money for the duration of the term (unless you pay a penalty).
Most CDs are FDIC-insured.	You could miss out on better investment opportunities while your money’s “trapped” in a CD.
Interest rates are “fixed,” so you’re protected from a general drop in rates.

Exchange-Traded Funds (ETFs)

Best for: Smaller long-term investments

An exchange-traded fund (ETF) allows you to buy an assortment of stocks all at once, and it’s the best way to invest money in the stock market while minimizing risk. 

It’s common for an ETF to track a particular stock market “index” like the S&P 500. That means your gains and losses will mirror the fate of the stocks that make up the index.

The great thing about an ETF is that it’s a diversified investment. You’re not betting on the success of a single business, but on the collective fate of multiple companies. 

That said, the success of an ETF investment is linked to the stock market. Losing money is a real possibility. But, the stock market has been steadily growing in value for decades, despite the dips and crashes that create all the headlines. That’s why an ETF is usually best for long-term investors.

And unlike mutual funds, ETFs can be bought and sold all day. That increases flexibility for investors. 

You can invest in an ETF through digital investment platforms, like:

• Stash – This finance app will create your diversified portfolio for you.
• Acorns – This platform promotes healthy habits with an automatic savings feature.
• Magnifi – With an “AI assistant,” this app will put the power of technology behind your investments. 
• M1 Finance – This is a classic brokerage account, perfect for managing your own transactions. 

Pros	Cons
The investment is diversified.	There’s less chance of massive returns than with individual stocks.
You can trade in ETFs throughout the day (as long as the stock market is open).	Some brokerage firms charge a maintenance fee.
ETF transactions are often commission-free.

Index Funds

Best for: Young investors

An index fund is similar to an ETF in that it allows you to invest in a group of stocks, called an “index,” all at once. This gives the investment more diversity, which is helpful for minimizing risk. 

Massive gains (especially in the short term) are unlikely with an index fund. This isn’t an attempt to “beat the market,” but an investment that tracks the general market’s progress. 

That’s why an index fund is the best way to invest money for young investors. Sure, there might be some dips in the market, but if you’re committed to playing the long game, the market is likely to go up eventually.

Investing in index funds is easy if you use an online brokerage platform. Magnifi is one option, and it has the added benefit of providing AI-generated advice. There’s also Axos, which lets you choose between managed portfolios and self-directed trading. 

Pros	Cons
Diversification serves to minimize risk.	Some platforms have a minimum investment requirement.
You benefit from the long-term growth of the stock market.	You’re less likely to earn massive returns than with individual stocks.
Fund management fees are generally low.

Stocks

Best for: Maximizing returns

Buying individual stocks is the best way to invest money if you want to take a shot at earning truly impressive returns. It’s risky, but it also gives you a genuine chance to “get rich quick.”

When you buy stock, you’re buying “shares” of a company. That means your investment is tied to the fate of that particular business. If things go well, you could make a pretty penny. If things go poorly, you could lose it all.

High risk, high reward – that’s the phrase to remember. So, should you invest your emergency savings in the stock market? No! That’s basically just gambling. 

But if you’ve got some money that you can afford to risk – meaning you have other money stashed in safer investments, then buying stocks can be a great way to diversify your portfolio and give yourself a chance of seriously growing your wealth. 

And thanks to online platforms, investing in stocks is easier than ever before.

Here are some platforms that you can use for investing:

• Robinhood – This platform has become famous for making it simple to buy stocks online.
• Fierce – This app-based service offers both stock trading and crypto trading.
• Public – From stocks to artwork, this platform can help you invest in practically anything.
• SoFi Invest – This online bank offers stock trading as one of its many financial services. 

Want to learn more? Check out this article on how to invest in stocks. 

Pros	Cons
You can earn massive returns.	There’s a serious risk of losing your money.
You can use stocks to increase the potential upside of a diversified portfolio.	Successful investing often requires research.
Modern finance platforms make it easy to buy stocks online.

Real Estate

Best for: Diversifying your portfolio 

To invest in real estate basically means to buy properties, and it’s the best way to invest money if you really want your portfolio to be diverse.

With traditional real estate investing, you’d start by purchasing a property. This could be a house, an apartment building, a business space, or even a plot of empty land.

From there, there are two ways to potentially make money:

1. Rent the space to tenants and collect monthly rental payments.
2. Watch the property increase in value. 

Thanks to digital investment platforms, you can invest in just a portion of a real estate deal – making it easier to get involved with smaller amounts of money. You’ll still get the benefit of diversifying your portfolio, but you won’t take on the risk of owning an entire property yourself.

Real estate platforms include:

• Fundrise – This platform specializes in alternative investments, including real estate and venture capital. Learn everything there is to know about this investing platform in this complete Fundrise review, this Fundrise vs CrowdStreet comparison, this Fundrise vs Yieldstreet comparison, this Fundrise vs Groundfloor comparison, this Fundrise vs Realty Mogul comparison, and this Fundrise vs Arrived Homes comparison.
• Ark 7 – If you want to invest in rental homes, this platform makes it easy.
• Groundfloor – By offering “fractionalized” investments, this platform makes it simple to enter the real estate game. Read this full Groundfloor review to learn more.

Do you like the idea of getting creative with your money? Then check out this list of the best alternative investments. And if you’d like to learn about wine and spirits as alternative investments, check out our Vint vs Vinovest comparison.

Pros	Cons
The returns can be large.	You’ll lose money if a property’s value decreases.
Rental properties produce regular cash flow.	You can’t access money that’s “tied up” in a real estate property.
Real estate is often a good long-term investment.	Managing a rental property can take a lot of time and effort.

Cryptocurrency

Best for: Investors with high risk tolerance

Cryptocurrencies like Bitcoin and Ethereum are alternative forms of money that exist in the digital world. 

While cryptocurrencies still aren’t used for most day-to-day transactions, they’ve become popular for investors looking to take a chance and diversify their portfolios. 

Cryptocurrency markets tend to be especially volatile. What does that mean for investors? Extremely high risk – but also extremely high rewards. 

So crypto probably isn’t the best way to invest money that you’ll need to use in the next few years. But if you have some additional savings and you want to give yourself a chance of hitting it big? Then, sure, it might be worth considering.

You can buy crypto with an investment platform like Public or go through an online bank like SoFi Invest. 

Pros	Cons
Price volatility can produce massive gains.	Price volatility leaves you vulnerable to massive losses.
You can buy and sell crypto any time of day (the market doesn’t “close”).	The markets are difficult to predict.
The digital infrastructure around crypto is growing.

Bonds 

Best for: Stabilizing your portfolio 

Bonds are basically miniature loans that you make to a company or the government. 

In exchange for “buying” the bond, you’re entitled to earn interest. Since the interest rate doesn’t change, you know how much you’ll earn. This makes bonds the most common example of a “fixed-rate security.”

Government bonds have the benefit of being almost completely risk-free. They also tend to increase in value whenever the stock market decreases, which is what makes them a stabilizing force in your larger investment portfolio. 

There are two main types of bonds:

1. Government bonds. Issued by states, municipalities, or even the federal government, these are the bonds that allow you to avoid risk.
2. Corporate bonds. Issued by companies, these bonds are much riskier. 

So, if your goal is stability, then government bonds are the way to go. 

You can buy bonds through pretty much any brokerage service. If you want to maximize convenience, I’d recommend using Stash or Robinhood. They’re both app-based platforms, making it easy to manage your finances on the go.

Pros	Cons
You’ll earn interest at a fixed rate.	There’s no chance of large returns.
Government bonds are essentially risk-free.	You might need to pair bonds with riskier investments to reach your long-term goals.
Bonds can help balance a diversified portfolio.

Commonly Asked Questions About The Best Way to Invest Money 

Investing for Beginners? 

If you’re a beginner looking for the best way to invest money, here are some options:

• High-yield savings accounts or HYSAs (like the Upgrade Premier Savings account)
• Certificates of deposit or CDs (like this one from CIT Bank)
• Exchange-traded funds or ETFs (start by using Stash or Acorns) 
• Index funds (give Magnifi a try)
• Stocks (get started with Robinhood or Fierce) 
• Real estate (try out Groundfloor or Ark 7)
• Cryptocurrency (try Public) 
• Bonds (check out Stash)

For even more opportunities, check out:

• Fundrise (read this full Fundrise review)
• Augusta Precious Metals (check out this Goldco vs Augusta Precious Metals comparison)
• Goldco (read this full Goldco review to learn more)
• Vinovest (read this full Vinovest review to learn more)
• CrowdStreet (learn more in this Fundrise vs CrowdStreet comparison)
• Yieldstreet (learn more in this Fundrise vs Yieldstreet comparison)
• Groundfloor (learn more in this full Groundfloor review and this Fundrise vs Groundlfoor comparison)
• RealtyMogul (learn more in this Fundrise vs Realty Mogul comparison)
• Arrived Homes (learn more in this Fundrise vs Arrived Homes comparison)
• Streetbeat (read this full Streetbeat review)

Learn more in our guide to investing for beginners.

Small Investments That Make Money?

There are lots of ways to invest just a small amount of money. One option is to buy into an exchange-traded fund (ETF), which will make money if the associated stocks increase in price. You could also invest in real estate through a “fractionalized” investment with Groundfloor. 

What to Do With Cash Right Now?

The best way to invest money depends on your situation. If you might need the money soon, stick it into a high-yield savings account (HYSA), where it will earn interest while remaining accessible. If you want to maximize returns, consider something riskier, like buying stocks.  

To learn which budgeting app could best help you manage your finances and boost your savings, check out these comparisons of Rocket Money vs the competition:

• Rocket Money vs YNAB
• Rocket Money vs Simplifi
• Rocket Money vs Copilot

How to Invest $1,000 Dollars Wisely?

The best way to invest money is by diversifying your investment portfolio. That means you shouldn’t put the entire $1,000 in the same place. Try putting the money you might need in a high-yield savings account and then splitting the rest between bonds and an exchange-traded fund (ETF).  

How to Invest $100 Dollars to Make $1,000?

Investing $100 to make $1,000 is tough, especially if you want to do it quickly. Your best bet is to try a high-risk, high-return investment. Options include:

• Buying individual stocks (get started with Public) 
• Buying a stake in a real estate deal (check out Fundrise)
• Investing in crypto (SoFi Invest can help) 

What is The Better Way to Invest Money?

The best way to invest money depends on your goals and financial situation. If you want to avoid losing the money you have, try safer options like high-yield savings accounts, CDs, and bonds. To increase your potential earnings, try something riskier, like ETFs or individual stocks.