6 Best Ways to Invest Money in 2025

1. Invest in a Retirement Plan

One of the best ways to invest for retirement is to start with a tax-advantaged retirement account. These are dedicated financial accounts that give you special tax benefits in exchange for saving for retirement.

401(k)s

A 401(k) is an employer-sponsored account that allows you to sign up for automatic contributions to invest a portion of your paycheck pretax. Not only do automatic contributions make it easier to stay consistent, but money in your 401(k) continues to grow and compound tax-free until you withdraw it in retirement.

Some employers offer to match your 401(k) contributions up to a certain percent of your compensation. If they do, make sure you contribute at least enough to exhaust the match: It adds up to free money toward your retirement.

If you work for a nonprofit, your workplace retirement account may be called a 403(b), rather than a 401(k). While there are some differences, these accounts offer largely the same perks for savers.

IRAs

If your workplace doesn’t offer a retirement account, you can open an individual retirement account (IRA) to invest for retirement on your own. Opening an IRA is quick and easy, and there are two main types of IRAs to choose between:

• Traditional IRA: Traditional IRAs are funded with pretax dollars, reducing your taxable income on your income taxes for the year. Your money grows on a tax-deferred basis, and you’ll pay taxes on the funds you withdraw in retirement.
• Roth IRA: Contributions to a Roth IRA are made with post-tax dollars, which means you won’t owe any taxes when you withdraw those funds in retirement. The returns your Roth IRA earns aren’t subject to taxation, now or in retirement. As an added benefit, Roth IRAs no longer have required minimum distributions for the account owner as of 2024.

If you’re not sure which option is best for you, work with a financial planner to come up with a plan.

Beyond your retirement account, if you decide that you want to branch off into other investments, there are more options to consider.

2. Invest With a Robo-Advisor

Robo-advising can be an attractive option for getting started with investing. They have low fees and low minimum account balances, which makes them a financially accessible option. On top of that, robo-advisors automate investing decisions and rebalance your portfolio for you based on your risk tolerance and goals. Taking the emotion out of your investing strategy can be a big plus for new investors.

Of course, there are some downsides to robo-advising too. You may prefer to go with traditional or hybrid investing, which gives you the option to speak to a human investor when you have questions about your investments.

Learn more >> Is Robo-Advising Safe?

3. Invest in Pooled Funds

Creating a diverse investment portfolio helps you build wealth while mitigating risk. These types of funds can help you invest widely:

• Mutual funds: Mutual funds allow you to invest in a pool of diverse securities such as stocks and bonds by combining the capital of many investors across a range of assets. Mutual funds that are actively managed often charge management fees that can eat into returns.
• Exchange-traded funds (ETFs): Like mutual funds, ETFs pool investors’ funds across diverse baskets of securities. Exchange-traded funds can be traded throughout the day like stocks, and often have lower fees than mutual funds.
• Index funds: Index funds are a type of mutual fund or ETF that invest in securities that mirror a market index, such as the S&P 500. They offer low fees because they’re passively managed, and they historically offer returns as high as actively managed funds, according to the Securities and Exchange Commission (SEC).

Learn more >> ETF vs. Mutual Fund: What’s the Difference?

4. Open a Certificate of Deposit

Certificates of deposit (CDs) are a low-risk investing option with a modest rate of return. They pay you a fixed rate of interest in exchange for leaving your money deposited for a set term. When the CD matures (or, in other words, the term ends) you get your principal back, plus interest.

In general, interest on CDs can allow you to lock in higher rates than you may get from a traditional savings account. The downside is that if you need your money before the CD is mature, you’ll be required to pay an early withdrawal penalty.

That said, there are no-penalty CDs that won’t ding you for withdrawing your funds early. They tend to come with lower rates than CDs with early withdrawal penalties, though.

Learn more >> Are CDs Worth It?

5. Buy Series I Savings Bonds

Series I bonds have a lot to offer investors who want predictable returns and low risk. These conservative investments pay interest on both a fixed and inflation-adjusted rate. They’re also government-backed, making them as close as you can get to a risk-free investment.

Series I bonds are an especially good deal during times of high inflation, when they keep pace with and even tend to outperform other savings vehicles, such as savings accounts. But during less inflationary times, returns aren’t very high. For example, for the period beginning November 1, 2024 and ending April 30, 2025, I Bonds offer a rate of 3.11%.

Beyond potentially modest returns, there’s another downside to consider: You’ll have to leave your money tied up for five years to avoid forfeiting some interest gains. You can learn more about Treasury bond restrictions and purchase bonds through TreasuryDirect.gov.

Learn more >> How to Buy Bonds

6. Try Investing in REITs

Investing in real estate properties can be lucrative, but it also requires large amounts of money and expert knowledge of markets to pull off successfully. Instead of jumping straight in, get your feet wet with real estate investment trusts (REITs).

REITs allow you to diversify your portfolio and invest in real estate without having to physically own and manage properties. Like stocks, REITs are publicly traded companies. When you invest in one, your money is pooled with other investors’ funds to finance income-producing real estate properties.

REITs typically specialize in a particular real estate sector, such as hotels, office buildings, shopping centers and apartment complexes. Some niche down even further, specializing in holding data centers, cell towers or farming property.

You can buy shares of REITs through a brokerage to dabble in real estate investing—all without ever having to buy, own, flip or rent out any properties yourself.

Learn more >> How to Start Investing in Real Estate

What to Know Before You Start Investing

To be a successful investor, you should know some key strategies before you start. Here are quick concepts to understand first.

Start With a Plan

Knowing what you hope to achieve through investing equips you to be strategic about how much to invest and where to put your money. Start by setting goals and determining how long you have to invest toward each goal.

For example, a short-term goal could be buying new appliances in a year. A medium-term goal could be buying a home in five years. And a long-term goal could be retiring 30 years from now.

Not only is knowing how long you have until your goal important for calculating how much money to put toward it, but it also helps you evaluate how much risk to expose yourself to—more on this below.

Evaluate Your Tolerance for Risk

All investments come with some level of risk. Conservative investments (such as bonds and CDs) tend to be a good option for earning a modest amount of interest while keeping your money relatively safe. High-risk investments such as stocks are better suited for long-term investing goals. With a high-risk investment, the conventional wisdom is that you’ll have a better chance to ride out market highs and lows in hopes of achieving high overall growth over a long period of time.

When you’re young and have plenty of time between now and your goal date, you can pick a more aggressive asset allocation to balance your portfolio toward growth. Then, you can gradually lessen your exposure to risk as you get closer to retirement, balancing your portfolio toward preserving wealth.

It’s often straightforward to automatically balance your portfolio toward your retirement goals when you enroll in a retirement investing plan. Many 401(k)s allow you to opt into automatic rebalancing, for instance.

Learn more >> How to Determine Risk Tolerance for Investing

Build a Solid Financial Foundation

Before you dive too far into investing, it’s important to be sure you’re accounting for your financial health overall. One important place to start is to establish an emergency fund.

Experts suggest setting aside three to six months’ worth of basic expenses in a high-yield savings account to ensure your money is there for you if you need it. This is especially important for investors, because you don’t want to end up pressured to sell your investments during a market low if you find yourself in a pinch.

Learn more >> Financial Priorities to Help You Plan

Pay Off Debt

If you’re carrying high-interest debt, such as credit cards or personal loans, it’s important to prioritize paying it off before you funnel extra money into investing. First, debt takes away from the funds you have available to invest, because money you put toward monthly payments is money you can’t put toward saving. Even more importantly, it’s unlikely that you’d see returns from investing higher than the cost of carrying high-interest debt.

Learn more >> Should I Pay Off Debt Before I Invest?

The Bottom Line

Starting your investing journey is exciting—it’s a big move toward building wealth and progress toward your biggest financial goals. Remember to stick with tried and true investing wisdom: Start with your tax-advantaged accounts first, diversify your portfolio, stick with your plan and avoid trying to beat the market.

For more personalized advice on how to start investing, consider working with a financial planner. They can help you come up with a strategy that works for you, plus balance investing with other goals, such as building up your emergency savings or buying a home.