When you invest, you deposit a portion of your income into a specific venture with the expectation that you'll earn a profit. Every type of investment carries a different level of risk.

Investment options are available to everyone, whether you want to invest $100 or tens of thousands of dollars. Most investment options can be handled online to make processing more convenient, and online investing services also offer educational resources to help you.

Certificates of Deposit and Money Market Accounts

Because CDs and MMAs are FDIC-insured, they are relatively risk-free. Unlike higher-risk stock investments that can fluctuate dramatically, the risk associated with these accounts is that you are locking your money in for a specified period of time at a specified rate, so if you need your money or rates increase, you might be subject to a penalty if you withdraw it. See the latest IRA Rates here.


CDs offer a higher interest rate than savings accounts and a fixed rate of return, so you’ll know ahead of time how much the investment will earn. You can purchase a short-term CD — maturing in as little as six months — a long-term CD — maturing in as many as 10 years. Typically, the higher your balance and longer the term, the better interest rate you’ll receive.

Money Market Accounts

MMAs also can earn a higher interest rate than traditional savings accounts, but you can expect a higher minimum balance requirement ranging between $500 and $50,000. Unlike CDs, you can add or withdrawal funds to your MMA; however, there is a federal limit of six transactions per month. Interest is compounded and paid out either monthly or quarterly.

Stocks, Bonds and Mutual Funds

Stocks, bonds and mutual funds carry more risk than CDs and MMAs. Opening a brokerage account with a licensed brokerage firm can be a smart way to keep track of all of your investments.


Stocks and equities give you a small ownership in a company. They are risky because, although you’ll gain income if the stock you purchased rises in value, you’ll also lose money if that stock takes a dive.


When you purchase a bond, you are basically giving a loan to a company, government or municipality. The bond comes with repayment terms that include the principal plus interest. Bonds are less risky than stocks. The risk is the possibility of the borrower failing to make the required payments by the deadline.

Mutual Funds

A mutual fund is made up of a combination of stocks, bonds and other securities. A typical mutual fund holds around 100 securities, according to Fidelity. The collection of these securities is called a portfolio.

When you invest in a mutual fund, you are in essence putting your money together with other investors and leaving the decisions as to when to buy and sell the securities within the mutual fund up to a portfolio manager.

401ks and IRAs

401ks and individual retirement accounts are investment accounts designed to help people save specifically for retirement. A 401k is funded from money taken directly out of your paycheck, whereas an IRA requires you to make your own deposits.


Although a 401k is sponsored by your employer, you have control over how the contributions are invested. Employers often match contributions up to a certain amount, so you can increase your balance significantly if you add enough funds from your paycheck to the 401k to get the full match. This investment doesn’t require you to pay taxes on the money until you make a withdrawal.


A traditional IRA can be better for individuals who would rather pay taxes later when they withdraw from the account in retirement. Go with a Roth IRA if you’re willing to forgo taking a deduction now in return for tax-free withdrawals at retirement.

Other Ways to Invest

Less traditional, higher-risk and potentially lucrative investment alternatives include investing in specific commodities or real estate. You might also consider other alternative investments such as art or collectibles, which can change in value dramatically based on consumer interest.

Real Estate

You can make money purchasing a rental property or by getting a deal on a fixer-upper and reselling it. A more long-term approach is to purchase property during a buyer’s market and then wait for home values to increase before selling for a profit.


Just like with purchasing stocks, investors can buy commodity-based oil exchange traded funds on a stock exchange. Although it’s a high-risk type of investing, investing in ETFs has the potential for big returns.

Consult an investment advisor before committing to high-risk investments or any investment that you do not fully understand.

About the Author

Alicia Bodine is a New Jersey-based writer specializing in finance, travel, gardening and education. With more than 13 years of experience, her work has appeared in, Livestrong, eHow, USA TODAY, GlobalPost, and wiseGEEK.