11 Best Investments in 2024 - NerdWallet (2024)

The term "investing" may conjure up images of the frenetic New York Stock Exchange, or you may think it's only for people who are richer, older, or further along in their careers than you. But this couldn't be further from the truth.

When done responsibly, investing is a great way to grow your money. This is especially true in a year like 2024, when the three major indexes – S&P 500, Dow Jones Industrial Average and Nasdaq – reach record highs, with the S&P 500 above 4,800 and the Dow Jones above 38,000 for the first time. By investing you can contribute to economic recovery and ensure that your money keeps pace with inflation.

Ofdifferent types of investmentsare available to virtually everyone, regardless of age, income or career. However, such factors will influence which investments are best for you at this time.

For example, someone who is nearing retirement and has healthy savings will likely have a very different investment plan than someone who is just starting their career with no savings. None of these people should avoid investing; they just need to choose the best investments for their individual circ*mstances.

Here are 11 of the best investments to consider, generally ranked by risk from low to high. Keep in mind that lower risk usually also means lower returns.

11 best investments of the moment

1. High return savings accounts

Onlinesavings accountand cash management accounts offer a higher return than on a traditional bank savings account or checking account. Cash management accounts are like a hybrid savings account-checking account: They can pay interest similar to savings accounts, but are typically offered by brokerage firms and can come with debit cards or checks.

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

If you're just starting to save and invest, a good rule of thumb is to keep three to six months' worth of living expenses in an account like this before spending more on the investment products at the bottom of this list.

Where to opena savings account: because of the lower fixed costs, online banks usually offer higher rates than what you get at traditional banks with physical branches.

Where to opena cash management account: Investment companies and robo-advisors like Betterment and SoFi offer competitive ratescash management accounts.

2. Certificates of Deposit

A deposit slip orCD, is a federally insured savings account that offers a fixed interest rate for a specified period of time.

Best for: A CD is for money that you know you will need at a fixed date in the future (such as a down payment on a house or a wedding). Common terms are one, three, and five years, so if you want to safely grow your money for a specific purpose within a predetermined time frame, CDs can be a good option. However, it's important to note that you'll likely have to pay a fee to get your money out of a CD early. As with other investments, don't buy a CD with money you'll need soon.

Where can it be purchasedCDs: CDs are sold by term, and the best prices are generally found at online banks and credit unions. Seeing itbest CD prices at the momentbased on term and account minimum.

3. Bonds

Bondscan offer investors a relatively safe form of interest. Lower risk bonds generally pay a lower interest rate than higher risk bonds, including government or corporate bonds.

Government bonds

A government bond is a loan from you to a government entity (such as the federal or local government) that pays investors interest on the loan over a specified period of time, usually one to thirty years. Due to the constant flow of payments, bonds are known as afixed-income security. Treasury bonds are a virtually risk-free investment because they are backed by the full faith and credit of the U.S. government.

The cons? In return for that effect, you won't see as high a return on government bonds as you would on other investments. If you were to hold a portfolio of 100% bonds (as opposed to a mix of stocks and bonds), it would be significantly more difficult to achieve your retirement or long-term goals. (For more information, see ourbond explainer.)

Best for: Conservative investors who prefer less volatility in their portfolio.

“Bonds provide ballast to a portfolio that typically rises when stocks fall, allowing nervous investors to stay on track with their investment plan and not panic,” says Delia Fernandez, a certified financial planner and founder of Fernandez Financial Advisory in Los Alamitos , California. .

The fixed income and lower volatility of bonds make them common for investors nearing or already retired, as these individuals may not have a long enough investment horizon to weather unexpected or severe market downturns.

Where can it be purchasedTreasury bonds: You can purchase 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 ithow to invest in bondshelps you identify which types to buy and where.

Corporate bonds

Corporate bondsworks in the same way as government bonds, only you lend money to a company and not to a government. As such, these loans are not backed by the government, making them a riskier option. And when it comes to a high-yield bond (also called a junk bond), these can actually be significantly riskier, as they adopt a risk-return profile more similar to stocks than bonds.

Best for: Investors who are looking for fixed income securities with potentially higher returns than government bonds and who are willing to take a little more risk in return. With corporate bonds, the greater the chance that the company will go bankrupt, the higher the return. Conversely, bonds issued by large, stable companies will generally yield lower returns. It is up to the investor to find the risk-return balance that works for him or her.

Where can it be purchasedcorporate bonds: Just like government bonds, you can buy corporate bond funds or individual bonds through an investment broker.

middenthe pooling of shareholders' money to invest in a portfolio of assets such as stocks or bonds. The investment term 'funds' often refers to investment funds. And three other common types of funds are money market funds, exchange-traded funds and index funds.

4. Money market funds

Money Market fundsis an investment product, not to be confused withmoney market accounts, which are bank deposit accounts that are similar to savings accounts. When you invest in a money market fund, you use your money to buy a collection of high-quality short-term government, bank or corporate debt.

Best for: Money that you will need soon and that you are willing to expose to a little more market risk. Investors also use money market funds to keep part of their portfolio in a safer investment than stocks or as a storehouse of money intended for future investments. While money market funds are technically an investment, don't expect the higher returns (and higher risk) of other investments on this side. The growth of money market funds is more like the dividends of high-yield savings accounts.

Where can it be purchaseda money market fund: Money market funds can be purchased directly from a mutual fund provider or a bank, but the widest selection is available from an online discount brokerage (you shouldopen a securities account).

5. Investment funds

INinvestment associationraises money from investors to buy stocks, bonds, or other assets. Mutual funds offer investors a low-cost way to diversify (spread their money across multiple investments) to hedge against each individual investment loss.

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

Where to buy mutual funds: Mutual funds are available directly from the companies that manage them, as well as through discount brokers. Almost allinvestment fund providers that we assessoffer mutual funds with no transaction fees (i.e., no commission) and tools to help you choose funds. Keep in mind 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.

6. Index funds

Aindex fundsis a type of mutual fund that holds the shares of a specific market index (e.gor the Dow Jones Industrial Average). The goal is to provide investment returns that are consistent with the performance of the underlying index, unlike an actively managed mutual fund that pays a professional to manage a fund's investments.

Best for: Index funds are among the best investments available for long-term savings goals. Index funds are not only more cost-effective due to lower fund management costs, but are also less volatile than actively managed funds that try to beat the market.

Index funds may be particularly suitable for young, long-term investors, who may invest a larger portion of their portfolio in higher-yielding stock funds than in more conservative investments such as bonds.

Young investors who can emotionally handle the ups and downs of the market might even do well to invest their entire portfolio in stock funds early on, says Fernandez.

To understand this better, let's look at the performance of the S&P 500 since 1990. An S&P 500 index fund would have tried to replicate these returns:

Stock market data may be delayed by up to 20 minutes and is for informational purposes only, not for trading purposes.

Where can it be purchasedIndex funds: Index funds are available directly from fund providers or through a discount broker. See our messagehow to invest in index funds.

7. Exchange Traded Funds

Exchange traded funds, orETF's,are similar to mutual funds in that they pool investors' money to purchase a collection of securities, creating a single diversified investment. The difference is in how they are sold: Investors buy shares of ETFs just as 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 time horizon. Additionally, ETFs are ideal for investors who do not have enough money to meet a mutual fund's minimum investment requirements, because an ETF share price may be lower than a mutual fund's minimum.

Where can it be purchasedETFs: ETFs have ticker symbols like stocks and are available through brokerage firms. (See our overview ofbest brokers for ETF investing.) Robo-advisors also use ETFs to build client portfolios.

8. Shares

Individual shares

INpilsrepresents a share of ownership in a company. Shares generally offer a greater potential return on your investment than lower risk investments such as government bonds, but can also expose your money to higher levels of volatility.

Best for: Investors with a well-diversified portfolio who are willing to take a little more risk. Due to the volatility of individual stocks, a good rule of thumb for investors is to limit their individual stock holdings to 10% or less of their total portfolio.

Where can it be purchasedStocks: An easy way to buy stocks is through an online broker. Once you have created and funded a trading account, select your order type and become a bona fide shareholder. Here you will find step-by-step instructionshow to buy shares.

Dividend stocks

Dividend stocks can provide the steady income of bonds as well as the growth of individual stocks and mutual funds.Yieldare regular cash payments that companies make to shareholders and are often associated with stable, profitable businesses. While the share prices of some dividend stocks may not rise as high or as quickly as those of growth-stage companies, they can be attractive to investors because of the dividends and stability they offer. Remember: Dividends in taxable investment accounts are taxable in the year the dividend occurs. While shares (which do not pay dividends) are primarily taxed when the shares are sold.

Best for: Any investor, from novice to retiree, although there are specific types of dividend stocks that may be better depending on where you are in your investing journey.

For example, young investors might want to take a closer look at dividend growers, which are companies with a strong track record of consistently increasing their dividends. These companies may not have high yields right now, but if their dividend growth continues, they could in the future. Over a long enough period of time, this (combined with a dividend reinvestment plan) can lead to returns that reflect thatgrowth sharesthat do not yield dividends.

Older investors looking for more stability or fixed income may want to consider stocks that pay consistent dividends. On a shorter timeline, reinvesting these dividends may not be the goal. On the contrary: taking the dividend in cash could be part of a fixed-income investment plan.

Where can it be purchasedDividend Stocks: Like others on this list, the easiest way to buy dividend stocks is through an online broker. Check out our piece furtherhigh yield stocks and how to invest in themfor information only.

9. Alternative investments

If you are not investing in the stock, bond or cash equivalents mentioned above, there is a good chance that your investment falls into the alternative asset class. This includes gold and silver, private equity, hedge funds and even coins, stamps, alcohol and art.

Best for: Investors (accredited investors(in many cases) who want to diversify away from traditional investments and hedge against downturns in the stock and bond markets.

Where can it be purchasedAlternative investments: While some online brokers offer access to certain alternative investments, other alternatives are only available through private wealth managers. However, there are ETFs - such as oil, gold and private equity ETFs - that track the asset itself, as well as companies related to the asset (such as gold mining and refining companies).

10. Cryptocurrency

Cryptocurrenciesare digital currencies built on blockchain technology that trade and circulate peer-to-peer without a central bank. Crypto can be used to purchase goods and services, such as cash (orFiat) currencies. Bitcoin and Ethereum are two of the most popular cryptocurrencies. Crypto ETFs are typically baskets of securities containing shares of publicly traded companies active in the crypto industry that change in price and trade like stocks. But with permission from aspot bitcoin ETFin early 2024, the most popular Bitcoin ETFs will attempt to mirror the price return of Bitcoin itself.

Best for:Some investors buy crypto because they believe its value will increase over time, while others invest because they see cryptocurrencies as a new and improved monetary system. Regardless of why you invest, cryptocurrencies are volatile and should be treated as a speculative investment.

Where to buy cryptocurrency:Investors trade cryptocurrencies on centralized exchanges, where tokens can also be exchanged for cash, or on decentralized exchanges. Centralized exchanges vary in the fees they charge, the minimum amounts for investments and accounts, and how easy it is to withdraw the crypto from the market. You won't normally see these restrictions on decentralized exchanges, but you will have to trade with your own wallet, which comes with its own risks.

11. Real estate

Traditional real estate investing involves buying a property and later selling it for a profit, or owning a property and collecting rent as a form of steady income. But there are several other, much more tangible ways to invest in real estate.

A common way is through real estate investment trusts, orREIT's. These are companies that own income-producing properties (think shopping centers, hotels, offices, etc.) and offer regular dividend payments.Real estate crowdfunding platforms, which often pool investors' money to invest in real estate projects, have also grown in popularity in recent years.

Best for: Investors who already have a healthy investment portfolio and are looking for further diversification, or are willing to take more risk for a higher return. Real estate investments are highly illiquid, so investors should not put money into investments that they may need to access quickly.

How to investin real estate: Some REITs can be purchased on the public stock market through an online stock broker, while others are only available on private markets. Likewise, some crowdfunding platforms are open toaccredited investorsalone, while others place no restrictions on who can invest.

How to choose the best investments in 2024

Building wealth through the investments described above can start at any age and at any income level. The key is to choose the right investments for you based on the following considerations: