Great question that I'm sure a lot of people are thinking about. But before we discuss where to invest, there are a few things you need to think about.
Have you set financial goals? You will need to know what you are saving for, and when you need the money in order to know where to invest it.
You should set up 3 sets of goals. Short term (1-12 months), Mid Term (1-5 years) and Long Term (anything greater than 5 years). They should be in writing and very specific. Write down exactly what the money is for, when you need it, and how much.
Once that is done, you can determine how much you need to save each month in order to achieve the goal in the allotted time frame. For your short term goals, put the money in savings account.
Mid term, if it's closer to the one year mark, put it in a savings account. If it's closer to 5 years, you can put it into a good, growth mutual fund.
For your long term goals, you can go into the mutual funds. If it's for retirement, and you have a savings a plan available through your employer, I would look into putting the money there, especially if there is a match. If no plan is available, a ROTH IRA is a great option. It will grow tax free!
Mutual funds are a great way to diversify, and many are available in a no cost or low cost option.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.