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Be sure to compare both returns and expense ratios when deciding between funds. You might also want to speak to a financial advisor or tax professional to see if there are bond funds that can help limit your tax liability, like some municipal bond funds. Equity index funds can hold hundreds or even thousands of individual stocks, as they aim to mimic the performance of a particular index.

Luckily, an extended time horizon gives you plenty of scope to weather the ups and downs of the market and take on more risk. Most of these investment strategies involve variations on the diversified portfolio of index funds covered in the previous section. Unlike taxable investment accounts, individual retirement account IRA or workplace retirement plans like a k come with valuable tax benefits.

For more on how you should save money for retirement, including potential portfolio breakdowns, check out our guide to retirement savings. If you want a set-it-and-forget-it solution, consider target date funds or robo-advisors. You can start one even before your children are born and invite family members to contribute as well. Depending on your state, you may even receive a break on your state income taxes if you invest using its plan.

While most financial experts still recommend you invest most of your money in low-cost index funds, you might decide to devote a small part of your taxable investment portfolio to individual stocks or more speculative, high-risk investments, like cryptocurrency. Be sure to do your research on any new investment, particularly those related to individual stocks or alternative investments, and keep an eye out for account-related or trading fees.

Was this article helpful? That allows you to focus on certain investing niches. Where to buy mutual funds: Mutual funds are available directly from the companies that manage them, as well as through discount brokerage firms. Almost all of the mutual fund providers we review offer no-transaction-fee mutual funds which means no commissions as well as tools to help you pick funds.

Index funds An index fund is a type of mutual fund that holds the stocks in a particular market index e. Best for: Index mutual funds are some of the best investments available for long-term savings goals. In addition to being more cost-effective due to lower fund management fees, index mutual funds are less volatile than actively managed funds that try to beat the market. Index funds can be especially well-suited for young investors with a long timeline, who can allocate more of their portfolio toward higher-returning stock funds than more conservative investments, such as bonds.

Where to buy index funds: Index funds are available directly from fund providers or through a discount broker. See our post on how to invest in index funds. Exchange-traded funds Exchange-traded funds, or ETFs, are like mutual funds in that they pool investor money to buy a collection of securities, providing a single diversified investment. The difference is how they are sold: Investors buy shares of ETFs just like 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. See our roundup of best brokers for ETF investing. Robo-advisors also use ETFs to construct client portfolios. Dividend stocks Dividend stocks can provide the fixed income of bonds as well as the growth of individual stocks and stock funds.

Dividends are regular cash payments companies pay to shareholders and are often associated with stable, profitable companies. While share prices of some dividend stocks may not rise as high or quickly as growth-stage companies, they can be attractive to investors because of the dividends and stability they provide. Keep in mind: dividends in taxable brokerage accounts are taxable the year dividends occur.

Whereas stocks that do not pay dividends are primary taxed when the stock is sold. Best for: Any investor, from first-timer to retiree, though there are specific types of dividend stocks that may be better depending on where you are in your investing journey. Young investors, for example, may do well to look into dividend growers, which are companies with a strong track record of consecutively increasing their dividends. These companies may not have high yields currently, but if their dividend growth keeps up, they could in the future.

Older investors looking for more stability or fixed income could consider stocks that pay consistent dividends. On a shorter timeline, reinvesting these dividends may not be the goal. Rather, taking the dividends as cash could be a part of a fixed-income investing plan. Where to buy dividend stocks: Similar to others on this list, the easiest way to buy dividend stocks is through an online broker. See our piece on high-dividend stocks and how to invest in them for more information.

Individual stocks A stock represents a share of ownership in a company. Stocks offer the biggest potential return on your investment while exposing your money to the highest level of volatility. Best for: Investors with a well-diversified portfolio who are willing to take on a little more risk.

Where to buy stocks: An easy way to buy stocks is through an online broker. Here are step-by-step instructions on how to buy stocks. This includes gold and silver, private equity, hedge funds, cryptocurrencies like Bitcoin and Ethereum , 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 stock and bond market downturns. Where to buy alternative investments: While some online brokers will offer access to certain alternative investments, other alternatives are available only through private wealth management firms.

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