Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.
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Each year brings new challenges for investors in terms of their investment strategies. Given the level of uncertainty in the U.S. and globally in 2025 so far, investors may want to ensure their portfolio can ride the waves for the coming months and beyond.
While it’s smart to keep an eye on the current economic and market climate — e.g., inflation, interest rates, the impact of certain technologies, tariffs — it’s just as important to anchor your investing strategy in time-tested principles of good investing: by knowing your current financial situation, your goals, time horizon, and risk tolerance.
With those as a base, here are eight investments to consider now, as well as some different types of investment accounts to know about.
Key Points
• While every year brings a new set of considerations for investors, it’s worth keeping a few fundamentals in mind.
• Deciding where to invest your money will depend on your goals, risk tolerance, and time frame.
• Newer investors can consider several investments to get started, including stocks, bonds, and mutual funds or ETFs that invest in those asset classes.
• Whether you tilt toward higher risk/high reward investments or lower risk/lower reward is something to consider in light of your overall goals and situation.
• Your goals will also help determine the best type of account to use for your investments.
Before You Invest Your Money
If you’re wondering where to invest right now, there are several answers and investment opportunities out there. But before you do anything, though, you’ll need to make some key decisions.
Your Current Financial Situation
No one invests in a vacuum, and your current financial situation will not only inform your goals, but potentially your timeline, risk tolerance, and how much money you have to invest.
Your age, your income, how much money you hope to invest each week or each month, whether you’re in debt — these personal factors are important to consider as you begin the self-directed investing process.
Goals
When deciding where to invest your money, the next step is to understand your goals: Whether you hope to earn additional income, or you’re saving for college, or planning for your retirement, it’s essential to know the main purpose of your investment plan.
Knowing your investing goals will help determine your timeline, and from there your risk tolerance — which can help you narrow down the investments you finally choose for your portfolio.
Your Timeline and Risk Tolerance
The time frame in which you hope to accomplish your goal is also important. For example, a longer time horizon might allow you to take on more risk with your investments. A shorter time horizon, where there’s a smaller margin to recover from any volatility, could inspire you to select lower-risk investments.
However, these choices ultimately depend on your personal tolerance for risk. If you can stomach a greater possibility of losing money when you invest, you likely have a higher risk tolerance. If you dread the idea of losses, you may have a lower risk tolerance.
There’s no right or wrong way to make these decisions. It’s important to take each factor into account in order to decide where to invest your money right now.
Learning About Investment Options
Once you’ve identified the main ingredients in your investment plan, you can begin to consider the type of investment account that makes the most sense for you, as well as exploring the various asset classes you can invest in.
A Few Types of Accounts
Your goal will likely help you decide what type of investment account is best for you.
• If your goal is to earn additional income … you may want to consider an online investing account or taxable brokerage account.
• If your goal is to save and invest for retirement … you may want to open an IRA, or fund your workplace retirement account, if you have one. Sometimes it’s possible to do both.
• If you’re thinking about college for your kids … a 529 college savings plan might be the way to go.
Those are just a few of the choices to think about. Again, knowing your personal goals will guide you.
Understanding Asset Classes
Stocks, bonds, cash, money market funds, and real estate are just a few of the asset classes available to investors.
In order to determine the asset classes that might work for your investment plan, it helps to understand the risk profile of a given investment. For example, stocks are generally considered higher-risk assets because they’re more volatile, compared with bonds, CDs, or money market accounts, which are lower risk.
The advantage of higher-risk investments is the potential for seeing bigger returns (a.k.a., profits). The downside, though, is the risk of losing money. Conversely, investing in less risky assets can help minimize potential volatility and losses, but the gains here are typically smaller. As the saying goes: High risk, high reward; low risk, low reward.
8 Ways to Invest Your Money Now
As noted, there are many different assets that investors can add to their portfolio. Some make more sense in certain situations than others — again, depending on your goal, timeline, and risk preference. That said, the following eight investments are worth considering now.
1. Stocks
What it is: Investing in stocks means having shares of ownership in a company or companies. When an investor buys a share in a company, they own a small portion of that company. Shareholders may even receive voting rights. This is why stocks are sometimes referred to as equities; investors now own equity in that company.
How it works: A stock can earn money in two ways. The first way is through the value of shares appreciating over time; this is called capital appreciation. The second is through periodic cash payments made to shareholders, called dividends.
Stock prices can be influenced by both internal and external factors, such as a new product launch or broader national or global events like a political event or natural disaster. Because the nature of business is highly unpredictable, stock prices can be volatile.
2. Bonds
What it is: When buying a bond, investors essentially loan money to a government, company, or other entity for a set timeframe. The bond guarantees that the investor will get regular interest payments and a return of their principal when the bond matures.
How it works: Investors buy bonds for a specific amount (i.e., the face value) and for a certain time period, called the bond’s maturity. The bond pays a fixed amount of interest, the coupon rate, typically every six months or year, and the principal is repaid at the maturity date.
Bonds are generally categorized as fixed-income investments. And while there are bonds with different levels of risk, bonds are considered conservative because they are less volatile than stocks.
• Government bonds, also known as Treasury bonds, bills, and notes, are considered lower risk because they’re backed by the full faith and credit of the U.S. government.
• Municipal bonds, or muni bonds, are a type of local government bond: States, cities, and counties issue munis to finance capital projects like hospitals, schools, and roads.
• Corporate bonds, which are issued to do research, develop products, and other aims. These can pay higher interest, but corporate bonds can also be higher risk.
Generally, though, bonds are often considered a safer, more stable investment that may be more appropriate for investors who aren’t as comfortable with the volatility of the stock market. That said, bonds are not completely without risk, and it is possible for bonds to lose value.
Recommended: How the Bond Market Works
3. Mutual Funds
What it is: Investing directly in stocks or bonds isn’t the only option available to investors. Mutual funds, which are pooled investments, present another way to invest in certain markets.
How it works: Think of these funds as baskets that hold an assortment of investments, such as stocks, bonds, real estate holdings, and much more. Funds provide investors with a basic level of diversification, and can be more affordable than buying individual securities. That said, mutual funds charge investment fees that can impact returns over time.
Some mutual funds only invest in stocks, or equities. Some only invest in bonds. Some invest in a mix of asset classes. There are thousands of mutual funds, and many brokerages or online investing platforms offer special screening tools to help you find the types of funds that suit your needs.
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4. Index Funds
What it is: A common type of mutual fund is something called an index fund. These are investment funds that track an index, which is usually a specific part of the broader market. For example, there are index funds that track the S&P 500 index or the Russell 2000 index of small U.S. companies — and thousands of other indices, as well.
How it works: Because index funds mirror market indices, and aren’t managed by live portfolio managers, they’re usually among the less expensive types of funds. This style is called passive management, and some investors like to include passive investments in their portfolio because, over time, these securities can add to portfolio returns.
That said, there is always a risk of loss, as market indices can also decline, bringing down the corresponding funds.
5. Exchange-Traded Funds (ETFs)
What it is: Exchange-traded funds, or ETFs, are similar to mutual funds in that they’re effectively a basket of different investments, combined into one security. Investors can buy shares of the fund, but unlike mutual funds, it’s possible to trade ETF shares throughout the day.
How it works: ETFs are a type of pooled investment fund, but owing to the way the underlying assets in the fund are created and redeemed, these funds can be more liquid than mutual funds. ETFs tend to be passively managed, and there are thousands of ETFs investors can choose from, encompassing all sorts of different market indexes, sectors, and asset classes.
6. Options
What it is: An option is a derivative contract that’s tied to an underlying asset, such as a stock. An option contract represents the right, but not always the obligation, to buy or sell a security at a fixed price by a specified date.
How it works: Instead of buying actual shares of a stock, trading options allows the investor to potentially profit from price changes in the underlying asset without actually owning it.
Options are used with leverage, and are a more sophisticated type of investment than, say, stocks or bonds. Options are fairly easy to trade, but they are complex and high risk.
You’d likely want to discuss options trading or investing with a financial professional before you get into it.
7. Real Estate
What it is: Real estate investing can include buying and managing physical property — houses, commercial buildings, etc. — or certain real estate-oriented investment vehicles.
How it works: While many investors may not have the capital laying around to buy a house for investing purposes, they can buy real estate stocks, mutual funds, ETFs, or consider REITs, or real estate investment trusts to get real estate exposure into their portfolios.
Real estate is sometimes considered an alternative investment, and as such it can be higher risk, but because real estate values don’t move in the same direction as the stock market, investing in real estate can provide diversification and a hedge against inflation.
8. Certificates of Deposit (CDs)
What it is: Certificates of deposit, or CDs, should also be on investors’ radar as part of the cash or cash-equivalent part of their asset allocation. CDs are bank products, and are somewhat like savings accounts, in which investors “lock up” their funds for a predetermined period of time in exchange for interest rate payments.
How it works: Functionally, CDs are similar to bonds in that you get a fixed rate of interest until the CD matures, at which time you get both principal and interest. But you may owe fees if you need to pull your money out of a CD before the maturity date.
On the upside, because these are bank products, when you open a CD at an FDIC-insured bank or NCUA-insured credit union, your deposits are covered up to $250,000, per depositor, for each ownership category (e.g., single, joint, etc.), at each insured institution.
Understanding Cash in Your Portfolio
In some instances, it may make the most sense to keep the money for a particular goal in cash, for easy access, and to minimize risk. Here are some traditional options that are generally available through banks and credit unions.
As such, these accounts are typically FDIC-insured at a bank, or NCUA-insured at a credit union. This means deposits are covered up to $250,000, per depositor, for each ownership category (e.g., single, joint, etc.), at each insured institution.
Savings accounts at a traditional bank or credit union: This is likely the most familiar option. Traditional and commercial banks remain popular for their large geographical footprint. Note that many traditional banks tend to pay a relatively low rate of interest on any cash holdings.
Online-only checking and savings accounts: Online-only banks and banking platforms may offer a slightly higher yield than a savings account at a commercial bank. Additionally, many do not require minimums or charge monthly maintenance or account fees.
Money market accounts (MMAs): A money market account (MMA) is a type of deposit account, like a savings account, typically offered by banks and credit unions. MMAs may offer higher interest rates than standard savings accounts, and they usually include some checking account features, i.e., a debit card or check-writing.
When considering cash as an asset class, consider the risk and reward tradeoff, just as you would for any other investment type. Although cash might not be risky when considered in terms of volatility, it does carry the risk of losing value over the long-term due to the effects of inflation, or prices rising over time.
Beginner-Friendly Places to Invest
If you’re a beginner investor looking for places to put your money, it may be beneficial to revisit some basic investing rules or guidelines. For instance, you’ll likely want to build an emergency savings fund before focusing on your stock portfolio.
But assuming you’re ready to put your money in the market, or otherwise start building your investment portfolio, many beginners start with some basic investment funds. ETFs are a popular choice, as are mutual funds — but your choices will depend on your goals and financial situation.
If you’re not sure where to turn or what to do, consider speaking with a financial professional for advice.
Creating a Goals-Based Strategy
Contrary to the way some new investors are encouraged to think about investing, it rarely makes sense to try to pick “hot” stocks right out of the gates.
Instead, take a step back and consider the bigger picture of your life and finances in order to identify one or more investing goals. Now that you have a better understanding of the investing process and some solid investment choices, you can start to connect the dots to make your own investment plan.
For example, if your goal is to save for retirement, you might want to think about using lower-cost investments like mutual funds or ETFs, and using a mix of equity funds and bond funds in your portfolio. If you have many years until you retire, and you can stomach a little extra risk, you may want to tilt your portfolio toward equities to maximize potential returns.
But if the volatility of such a mix makes you uncomfortable, consider a different balance that includes more fixed-income and/or cash, which could help mitigate the risk of equities.
Risk vs Reward
The asset allocation decision really boils down to an examination of an investment’s risk and reward characteristics in order to determine whether it’s a good fit for you and your goals.
Risk and reward are two sides of the same coin. Investors cannot have one without the other. For more reward potential, an investor will have to take more risk. There is no such thing as an investment that produces returns with no risk.
Let’s consider two hypothetical investment goals: $1,000 for a down payment and $1,000 for retirement. How do goals lead one down the path of where to invest?
• First, the $1,000 for a down payment. If the money is designated for use in the next few years, the risk of losing any money in a volatile investment may outweigh the potential to earn investment returns. Therefore, it might be best to keep this money in a lower-risk investment or cash equivalent.
• Next, the $1,000 for retirement. Many retirement investors have the goal of seeing growth over the long-term. Because of this longer time horizon, there should be enough time to recover after spates of volatility. Therefore, it may be suitable to create a portfolio that is primarily invested in the stock market or a combination of stocks and bonds.
Retirement investors close to retiring may opt to consider some exposure to bonds for both diversification purposes and to lower the overall volatility of the portfolio.
Ultimately, a person’s comfort level with risk vs. reward will determine their specific allocations. And it’s worth noting that an investing strategy isn’t stagnant. As a person ages, their goals and investing strategy will likely need to evolve, too.
Opening the Right Account
Knowing how to invest your money is one step, knowing where to invest your money is the next.
Retirement Accounts
It is not uncommon to hear someone refer to a 401(k) or an IRA as if one of those is itself an investment. But retirement accounts are not investments — they are tax-advantaged accounts that can hold investments.
You contribute money to a retirement account, and then those funds are used to purchase investments: e.g., stocks, bonds, mutual funds, and so on.
While retirement account holders can select the investments for their account, in a plan sponsored by your employer like a 401(k), the investing might be automated — and your money could be invested by default into a money market fund or a target date fund. Hence the confusion about the 401(k) being an investment itself.
Retirement accounts offer a tax benefit, like tax-free growth on your investments, which make them suitable vehicles for long-term goals. But because they offer a tax benefit, they come with more restrictions. For example, some retirement accounts, like 401(k) and traditional IRAs, levy a 10% penalty on money withdrawn before age 59 ½, with some exceptions.
Also, there are limits to how much money can be contributed annually to retirement accounts.
Brokerage Accounts
It is also possible to invest in an account that is not designated for retirement. At a brokerage firm, these are often simply referred to as brokerage accounts.
Brokerage accounts are considered taxable accounts. You pay taxes on realized capital gains — meaning, when you sell investments and actually reap a gain or loss. Because dividends are typically paid in cash periodically, you would owe tax on the dividend amount.
In contrast, tax-advantaged retirement accounts only involve paying taxes when you make a contribution or withdraw your money, depending on the type of account.
Recommended: How to Open an IRA: Beginners Guide
Weighing Your Options
It all comes down to the individual. You’ll need to look at your risk tolerance, time horizon, and personal preferences to determine the most suitable investing path or accounts.
For short-term goals that require more flexibility, a non-retirement account may be a better choice. Because there are no special taxation benefits, there are generally no rules about when money can be withdrawn or how much can be contributed. Because of this, non-retirement accounts can also be a good place to invest for those who have met their maximum contribution amount for the year in their retirement accounts.
The Takeaway
At any given time, there are a plethora of potential investments for your money. You can invest in stocks, bonds, real estate, commodities — the list is long. But each has its own considerations and risks that must be taken into account. Overall, your goals and financial situation are the most important things to keep in mind when deciding where to invest your money.
As for where to open an account, new investors may want to focus on an institution or platform where they are able to keep costs low. There’s not a lot that investors can control, like investment performance, but how much they pay in fees is one of them.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
FAQ
Which investment gives the highest returns?
Higher-risk investments tend to deliver the highest returns, but they can also deliver the biggest losses. These can include certain stocks or investment funds, particularly those focused on market segments that are risky or volatile. It’s important to invest with an eye to how much risk makes sense for you.
Where can you invest your money as a beginner?
Beginners can choose a number of investment vehicles to invest their money. Some choices include investment funds like ETFs or mutual funds, which tend to be lower cost and provide some basic diversification.
Where can you invest money to get good returns?
There are numerous investment vehicles that might provide returns, but those returns are never guaranteed, and can be thwarted by down markets. It might be wiser to consider an overall strategy that can help your money grow, so you can reach your goals, rather than looking for a single investment that might hit the jackpot.
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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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