Best way to invest money as a 22 year old?
What is the goal of the money?  If it is to use in the short term, like savings for a car or college, then stick it in the bank and use it for that purpose. If you really want this money to mean something, then in my opinion you have only one choice:  Open a ROTH IRA with something like Vanguard or Fidelity and invest in an index fund.  Then do something that will be very difficult:  Don't touch it. By the time you are 65, it will grow to about 60,000.  However, assuming a 20% tax bracket, the value of that money is really more like 75,000.   Clearly this will not make or break you either way.  The way you live the rest of your life will have far more of an impact.  It will get you started on the right path. BTW this is advice I gave my son who is about your age, and does not earn a ton of money as a state trooper.  Half of his overtime pay goes into a ROTH.  If he lives the rest of his life like he does now, he will be a wealthy man despite making an average income.  No debt, and investing a decent portion of his pay. Most important: Any gains you make from risking this sum of money over the next few years will not be life changing, but if you can't afford to lose it, then losses can be. Rhetorical question: How can you trust what I say you should do with your money? Answer: You can't. I'm happy to hear you're reading about the stock market, so please allow me to encourage you to keep learning.  And broaden your target to investing, or even further, to financial planning.  You may decide to pay down debt first.  You may decide to hold cash since you need it within a couple years. Least important: I suggest a Roth IRA at any online discount brokerage whose fees to open an account plus 1 transaction fee are the lowest to get you into a broad-market index ETF or mutual fund. Hopefully this $1000 is just a start, and not the last investment you will ever make. Assuming that, there are a couple of big questions to consider: One: What are you saving for? Are you thinking that this is for retirement 40 or 50 years from now, or something much sooner, like buying a car or a house? You didn't say where you live. In the U.S., if you put money into an IRA or a 401k or some other account that the government classes as a retirement account, you don't pay taxes on the profits from the investment, only on the original principal. If you leave the money invested for a long period of time, the profits can be many times the original investment, so this makes a huge difference.  Like suppose that you pay 15% of your income in state and local taxes.  And suppose you invest your $1000 in something that gives a 7% annual return and leave it there for 40 years. (Of course I'm just making up numbers for an example, but I think these are in a plausible range. And I'm ignoring the difference between regular income tax and capital gains tax, etc etc. It doesn't change the point.) If you put the money in a classic IRA, you pay 0% taxes the year you open the account, so you have your full $1000, figure that compound interest for 40 years, you'll end up with -- crunch crunch crunch the numbers -- $14,974. Then you pay 15% when you take it leaving you with $12,728. (The end result with a Roth IRA is exactly the same. Feel free to crunch those numbers.) But now suppose you invest in a no-retirement account so you have to pay taxes every year. Your original investment is only $850 because you have to pay tax on that, and your effective return is only 5.95% because you have to pay 15% of the 7%. So after 40 years you have -- crunch crunch -- $10,093. Quite a difference. But if you put money in a retirement account and then take it out before you retire, you pay substantial penalties. I think it's 20%. If you plan to take the money out after a year or two,  that would really hurt. Two: How much risk are you willing to take? The reality of investment is that, almost always, the more risk you take, the bigger the potential returns, and vice versa. Investments that are very safe tend to have very low returns. As you're young, if you're saving for retirement, you can probably afford a fairly high amount of risk. If you lose a lot of money this year, odds are you'll get it back over the next few years, or at least be able to put more money into investments to make up for it. If you're 64 and planning to retire next year, you want to take very low-risk investments. In general, investing in government bonds is very safe but has very low returns. Corporate bonds are less safe but offer higher returns. Stocks are a little more. Of course different companies have different levels of risk: new start-ups tend to be very risky, but can give huge returns. Commodities are much higher risk. Buying on margin or selling short are ways to really leverage your money, but you could end up losing more than you invested. Mutual funds are a relatively safe way to invest in stocks and bonds because they spread your risk over many companies. Three: How much effort are you willing to put into managing your investments? How much do you know about the stock market and the commodities market and international finance and so on, and how much are you willing to learn? If your answer is that you know a lot about these things or are willing to dive in and learn a lot, that you can invest in individual stocks, bonds, commodities, etc. If your answer is that you really don't know much about all this, then it makes a lot of sense to just put your money into a mutual fund and let the people who manage the fund do all the work. The classic answer is simple. Aim to build up a a financial cushion that is the equivalent of 3 times your monthly salary. This should be readily accessible and in cash, to cover any unforeseen expenses that you may incur (car needs repairing, washing machine breaks down etc). Once you have this in place its then time to think about longer term investments. Monthly 'drip feeding' into a mutual stock based investment fund is a good place to start. Pick a simple Index based or fund with a global investment bias and put in a set amount that you can regularly commit to each month. You can get way more complicated but for sheer simplicity and longer term returns, this is a simple way to build up some financial security and longer term investments. "First off, monozok is right, at the end of the day, you should not accept what anyone says to do without your money - take their suggestions as directions to research and decide for yourself.  I also do not think what you have is too little to invest, but that depends on how liquid you need to be.  Often in order to make a small amount of money grow via investments, you have to be willing to take all the investment profits from that principle and reinvest it.  Thus, can you see how your investment ability is governed by the time you plan to spend without that money?  They mantra that I have heard from many people is that the longer you are able to wait, the more 'risk' you can take.  As someone who is about the same age as you (I'm 24) I can't exactly say yet that what I have done is sure fire for the long term, but I suggest you adopt a few principles: 1) Go read ""A Random Walk Down Wall Street"" by Burton G. Malkiel.  A key point for you might be that you can do better than most of these professional investors for hire simply by putting  more money in a well selected index fund.  For example, Vanguard is a nice online service to buy indexes through, but they may require a minimum.  2) Since you are young, if you go into any firm, bank, or ""financial planner,"" they will just think you are naive and try to get you to buy whatever is best for them (one of their mutual funds, money market accounts, annuities, some flashy cd).   Don't.  You can do better on your own and while it might be tempting because these options look more secure or well managed, most of the time you will barely make above inflation, and you will not have learned very much. 3) One exciting thin you should start learning now is about algorithmic trading because it is cool and super efficient. quantopian.com is a good platform for this.  It is a fun community and it is also free. 4) One of the best ways I have found to watch the stock market is actually through a stock game app on my phone that has realtime stock price feed.  Seeking Alpha has a good mobile app interface and it also connects you to news that has to do with the companies you are interested in."
In general, investors with a long period of time until they would need to withdraw the cash are best off holding mostly equities.  While the dividends that equities would return are less than the interest you would get in peer-to-peer lending, over long periods of time not only do you get the dividends from equity investment but the value of the stock will grow faster than  interest on loans. The higher returns from stocks, however, comes with more risk of big downturns.  Many people pull their investments out of stocks right after crashes which really hurts their long term returns.  So, in order to get the benefit of investing in stocks you need to be strong enough to continue to hold the stocks through the crash and into the recovery. As for which stocks to invest in, generally it is best to invest in low-fee index funds/etfs where you own a broad collection of stocks so that if (when) any one stock goes bust that your portfolio does not take much damage.  Try to own both international and domestic stocks to get good diversification.  The consensus recommends adding just a little bit of REITs and bonds to your investments, but for someone at 25 it might not be worth it yet. Warren Buffett had some good thoughts on index investing. "What a lovely position to find yourself in! There's a lot of doors open to you now that may not have opened naturally for another decade. If I were in your shoes (benefiting from the hindsight of being 35 now) at 21 I'd look to do the following two things before doing anything else: 1- Put 6 months worth of living expenses in to a savings account - a rainy day fund. 2- If you have a pension, I'd be contributing enough of my salary to get the company match. Then I'd top up that figure to 15% of gross salary into Stocks & Shares ISAs - with a view to them also being retirement funds. Now for what to do with the rest... Some thoughts first... House: - If you don't want to live in it just yet, I'd think twice about buying. You wouldn't want a house to limit your career mobility. Or prove to not fit your lifestyle within 2 years, costing you money to move on. Travel: - Spending it all on travel would be excessive. Impromptu travel tends to be more interesting on a lower budget. That is, meeting people backpacking and riding trains and buses. Putting a resonable amount in an account to act as a natural budget for this might be wise. Wealth Managers: ""approx. 12% gain over 6 years so far"" equates to about 1.9% annual return. Not even beat inflation over that period - so guessing they had it in ultra-safe ""cash"" (a guaranteed way to lose money over the long term). Give them the money to 'look after' again? I'd sooner do it myself with a selection of low-cost vehicles and equal or beat their return with far lower costs. DECISIONS: A) If you decided not to use the money for big purchases for at least 4-5 years, then you could look to invest it in equities. As you mentioned, a broad basket of high-yielding shares would allow you to get an income and give opportunity for capital growth. -- The yield income could be used for your travel costs. -- Over a few years, you could fill your ISA allowance and realise any capital gains to stay under the annual exemption. Over 4 years or so, it'd all be tax-free. B) If you do want to get a property sooner, then the best bet would to seek out the best interest rates. Current accounts, fixed rate accounts, etc are offering the best interest rates at the moment. Usual places like MoneySavingExpert and SavingsChampion would help you identify them. -- There's nothing wrong with sitting on this money for a couple of years whilst you fid your way with it. It mightn't earn much but you'd likely keep pace with inflation. And you definitely wouldn't lose it or risk it unnecessarily. C) If you wanted to diversify your investment, you could look to buy-to-let (as the other post suggested). This would require a 25% deposit and likely would cost 10% of rental income to have it managed for you. There's room for the property to rise in value and the rent should cover a mortgage. But it may come with the headache of poor tenants or periods of emptiness - so it's not the buy-and-forget that many people assume. With some effort though, it may provide the best route to making the most of the money. D) Some mixture of all of the above at different stages... Your money, your choices. And a valid choice would be to sit on the cash until you learn more about your options and feel the direction your heart is pointing you. Hope that helps. I'm happy to elaborate if you wish. Chris." "For most, confidence comes with knowledge and experience. To understand more about how investing works, read articles about types of investments that you're interested in and browse the questions on this site. To gain experience, start with a ""paper money"" trading account. Most brokers will allow you to apply for a ""fake"" account so you can practice trading with simulated money. Once you've built up some confidence, you may wish to start investing a small amount of real money." Since there is no match on the 401k, it seems to me that your first priority should be your IRA (Roth or otherwise). I don't know what your salary is, but most 22 year-olds won't be maxing out both an IRA and 401k on only 10% of their incomes, so the rest of the list may be irrelevant. This post has been wrote in 2014, so if you read this text be aware. At the time, and since France does tax a lot investment, I'd suggest you start a PEA and filling in using the lazy investment portfolio. That means buying European and/or French ETFs & index, and hold them as long as you can. You can fill your PEA (Plan d'Epargne en Action) up to 150.000€ for a period of at least 8 years as long as you fill it with European and French stocks. After the period of 8 years your profit is taxed at only mere 15%, instead of the 33% you see in a raw broker account. Since you are young, I think a 100% stocks is something you can hold on. If you can't sleep at night with 100% stocks, take some bonds up to 25%, even more. Anyway, the younger you start investing, the more ahead you may eventually go. If you want to retire in 7 years at age 35 and only currently have 150k, and you need to ask this question of how to invest your money (risk free), then you will not be retiring at age 35 nor buying your house.  It is possible to do (but not risk free - in fact you will need to take quite a bit of risk) but you would need to have a detailed plan about how you would go about to achieve this goal, what assets you would be investing in, and what risk management you would have in place. If you have to ask this question all you have is a goal but no plan. You probably will need to do plenty of research in the types of investment you prefer and develop a plan to take you to your destination. This could take you a year or 10 years, depending on how motivated you are in acheiving your goals. If it's money you can lose, and you're young, why not?  Another would be motifinvesting where you can invest in ideas as opposed to picking companies. However, blindly following other investors is not a good idea.  Big investors strategies might not be similar to yours, they might be looking for something different than you.  If you're going to do that, find someone with similar goals. Having investments, and a strategy, that you believe in and understand is paramount to investing.  It's that belief, strategy, and understanding that will give you direction.  Otherwise you're just going to follow the herd and as they say, sheep get slaughtered. I would not advise any stock-picking or other active management (even using mutual funds that are actively managed).  There is a large body of knowledge that needs learning before you even attempt that. Stay passive with index funds (either ETFs or (even better) low-cost passive mutual funds (because these prevent you from buying/selling). But I have not problem saying you can invest 100% in equity as long as your stomach can handle the price swings.  If you freek out after a 25% drop that does not recover within a year, so you sell at the market bottom, then you are better off staying with a lot less risk.  It is personal. There are a lot of valid reasons for young people to accept more risk - and equally valid reason why not.  See list at http://www.retailinvestor.org/saving.html#norisk "At 50 years old, and a dozen years or so from retirement, I am close to 100% in equities in my retirement accounts.  Most financial planners would say this is way too risky, which sort of addresses your question.  I seek high return rather than protection of principal.  If I was you at 22, I would mainly look at high returns rather than protection of principal. The short answer is, that even if your investments drop by half, you have plenty of time to recover.  But onto the long answer. You sort of have to imagine yourself close to retirement age, and what that would look like.  If you are contributing at 22, I would say that it is likely that you end up with 3 million (in today's dollars).  Will you have low or high monthly  expenses?  Will you have other sources of income such as rental properties?   Let's say you rental income that comes close to covering your monthly expenses, but is short about 12K per year.  You have a couple of options: So in the end let's say you are ready to retire with about 60K in cash above your emergency fund.  You have the ability to live off that cash for 5 years.  You can replenish that fund from equity investments at opportune times.  Its also likely you equity investments will grow a lot more than your expenses and any emergencies.  There really is no need to have a significant amount out of equities.  In the case cited, real estate serves as your cash investment. Now one can fret and say ""how will I know I have all of that when I am ready to retire""?  The answer is simple: structure your life now so it looks that way in the future.  You are off to a good start.  Right now your job is to build your investments in your 401K (which you are doing) and get good at budgeting.  The rest will follow.  After that your next step is to buy your first home. Good work on looking to plan for your future." "Between 1 and 2 G is actually pretty decent for a High School Student.  Your best bet in my opinion is to wait the next (small) stock market crash, and then invest in an index fund. A fund that tracks the SP500 or the Russel 2000 would be a good choice. By stock market crash, I'm talking about a 20% to 30% drop from the highest point. The stock market is at an all time high, but nobody knows if it's going to keep going.  I would avoid penny stocks, at least until you can read their annual report and understand most of what they're claiming, especially the cash flow statement. From the few that I've looked at, penny stock companies just keep issuing stock to raise money for their money loosing operations.  I'd also avoid individual stocks for now. You can setup a practice account somewhere online, and try trading. Your classmates probably brag about how much they've made, but they won't tell you how much they lost.  You are not misusing your money by ""not doing anything with it"". Your classmates are gambling with it, they might as well go to a casino.  Echoing what others have said, investing in yourself is your best option at this point. Try to get into the best school that you can. Anything that gives you an edge over other people in terms of experience or education is good. So try to get some leadership and team experience. , and some online classes in a field that interests you." "You can't get much better advice for a young investor than from Warren Buffet. And his advice for investors young and old, is ""Put 10% of the cash in short‑term government bonds, and 90% in a very low‑cost S&P 500 index fund."" Or as he said at a different time, ""Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees"".  You are not going to beat the market. So just save as much money as you can, and invest it in something like a Vanguard no-load, low-cost mutual fund.  Picking individual stocks is fun, but treat it as fun. Never put in more money than you would waste on fun. Then any upside is pure gravy." "You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams.  The money returned by stock investing (capital gains and dividends) is just one such type of stream.  Some others include owning rental properties, being a passive owner of a business, and producing goods that earn long-term royalties instead of just an immediate exchange of time & effort for cash.    Of these, rental property is probably one of the most well-known and easiest to learn about, so I'd suggest you start with that as a second type of investment if you feel you need to diversify from stock ownership.  Especially given your association with the military, it is likely there is a nearby supply of private housing that isn't too expensive (so easier to get started with) and has a high rental demand (so less risk in many ways.)   Also, with our continued current low rate environment, now is the time to lock-in long term mortgage rates.  Doing so will reap huge benefits as rates and rents will presumably rise from here (though that isn't guaranteed.) Regarding the idea of being a passive business owner, keep in mind that this doesn't necessarily mean starting a business yourself.  Instead, you might look to become a partner by investing money with an existing or startup business, or even buying an existing business or franchise.  Sometimes, perfectly good business can be transferred for surprisingly little down with the right deal structure. If you're creative in any way, producing goods to earn long-term royalties might be a useful path to go down.  Writing books, articles, etc. is just one example of this.  There are other opportunities depending on your interests and skill, but remember, the focus ought to be on passive royalties rather than trading time and effort for immediate money.  You only have so many hours in a year.  Would you rather spend 100 hours to earn $100 every year for 20 years, or have to spend 100 hours per year for 20 years to earn that same $100 every year? .... All that being said, while you're way ahead of the game for the average person of your age ($30k cash, $20k stocks, unknown TSP balance, low expenses,) I'm not sure I'd recommend trying to diversify quite yet. For one thing, I think you need to keep some amount of your $30k as cash to cover emergency situations.  Typically people would say 6 months living expenses for covering employment gaps, but as you are in the military I don't think it's as likely you'll lose your job!  So instead, I'd approach it as ""How much of this cash do I need over the next 5 years?""  That is, sum up $X for the car, $Y for fun & travel, $Z for emergencies, etc.  Keep that amount as cash for now. Beyond that, I'd put the balance in your brokerage and get it working hard for you now.  (I don't think an average of a 3% div yield is too hard to achieve even when picking a safe, conservative portfolio.  Though you do run the risk of capital losses if invested.)  Once your total portfolio (TSP + brokerage) is $100k* or more, then consider pulling the trigger on a second passive income stream by splitting off some of your brokerage balance.  Until then, keep learning what you can about stock investing and also start the learning process on additional streams.  Always keep an eye out for any opportunistic ways to kick additional streams off early if you can find a low cost entry.   (*) The $100k number is admittedly a rough guess pulled from the air.  I just think splitting your efforts and money prior to this will limit your opportunities to get a good start on any additional streams.  Yes, you could do it earlier, but probably only with increased risk (lower capital means less opportunities to pick from, lower knowledge levels -- both stock investing and property rental) also increase risk of making bad choices." I'm not aware of any method to own US stocks, but you can trade them as contract for difference, or CFDs as they are commonly known. Since you're hoping to invest around $1000 this might be a better option since you can use leverage. Take the easy approach - as suggested by John Bogle (founder of Vanguard - and a man worthy of tremendous respect). Two portfolios consisting of 1 index fund each. Invest your age% in the Fixed Income index fund. Invest (1-age)% in the stock index fund.  Examples of these funds are the Total Market Index Fund (VTSMX) and the Total Bond Market Index (VBMFX). If you wish to be slightly more adventurous, blend (1-age-10)% as the Total Market Index Fund and a fixed 10% as Total International Stock Index (VGTSX).  You will sleep well at night for most of your life. "I'd like to modify the ""loss"" idea that's been mentioned in the other two answers.  I don't think a retail location needs to be losing money to be a candidate for sale.  Even if a retail location is not operating at a loss, there may be incentive to sell it off to free up cash for a better-performing line of business. Many large companies have multiple lines of business.  I imagine Sunoco makes money a few ways including: refining the gas and other petroleum products, selling those petroleum products, selling gas wholesale to franchised outlets or other large buyers, licensing their brand to franchised outlets, selling gas and convenience items direct to consumers through its own corporate-owned retail outlets, etc. If a company with multiple lines of business sees a better return on investment in certain businesses, it may make sense to sell off assets in an under-performing business in order to free up the capital tied up by that business, and invest the freed-up capital in another business likely to perform better. So, even ""money making"" assets are sometimes undesirable relative to other, better performing assets. Another case in which it makes sense to sell an asset that is profitable is when the market is over-valuing it.  Sell it dear, and buy it back cheap later."