What Should I Invest My Money In?

By Chris Duderstadt

February 16, 2024

What Should I Invest My Money In?

Key Points – What Should I Invest My Money In?

  • Questions to Answer Before Asking What Should I Invest My Money in
  • What Your Friend or Family Member Is Investing Their Money in Might Not Be the Best Answer for You … and Vice Versa
  • How Can You Invest in Yourself?
  • Stocks, Bonds, Mutual Funds, and ETFs
  • 5 Minutes to Read | 24 Minutes to Watch

What Should I Invest My Money in?

What should I invest my money in is oftentimes one of the first questions are advisors are asked when people meet with them for the first time. We understand why people ask that, but we don’t want people to be focused solely on investments as they’re planning for retirement. Your number one goal for retirement likely isn’t to have as much money as possible. It’s probably spending more time with family, traveling more, or something along those lines.

So, before you ask what should I invest my money in, ask yourself, “what does my money need to do for me to accomplish my goals?” Before you can answer that question, you obviously need to have an idea of what your goals are. It’s critical for your investment strategy to be designed around your financial goals along with your tolerance for risk and other factors that are unique to you. What your best friend invests in might not be the best option for you to invest in.

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Investing in Yourself!

Individual stocks and bonds are obviously among the top options for people to invest their money in. But if you’re still working, there’s an easy answer to the question this article poses that should top the list of what to invest your money in. Contributing to your employer 401(k) or to IRAs is a way to invest in yourself. There are different tax advantages depending on what kind of retirement account you want to contribute to.

By contributing to a traditional 401(k) or IRA, you’re making tax-deferred contributions, meaning that money won’t be taxed until you take it out. You also have the option to contribute to the Roth side of your 401(k). When you make Roth contributions, you must pay tax on the contribution, but the money will grow tax-free from that point on.

There are so many factors to your personal situation that factor into whether to save to Roth or traditional. It’s critical to work with a CFP® Professional that works alongside a CPA who will review your financial plan for tax planning opportunities. We’ve had countless people come to us with all their money saved in traditional 401(k)s and IRAs. We’ll always commend people who prioritize saving for retirement, but it’s important to create tax diversification as you figure out what you should invest your money in. Spreading your money across taxable, tax-deferred, and tax-free accounts can help tremendously with mitigating taxes over your lifetime.

Building Your Investment Portfolio

Along with having tax diversification, make sure that you have diversification among your investments as you’re building your investment portfolio. This is where the stocks and bonds come in. Let’s start with stocks.

Investing in individual stocks gives you the opportunity to have ownership of a portion of a company. The shares of your stock can earn you money via capital appreciation and dividends. While stocks can provide you high returns, they can also come with a great deal of risks.

Typically, bonds provide a safe place to invest your money in but tend to have lower returns than stocks. Bonds serve as a fixed income vehicle to lend the government or a corporate entity in return for interest payments and repayment of the bond’s face value when it matures. While stocks are thought of as a get-rich investment, bonds are thought of as a stay-rich investment. Keep that in mind as you’re trying to generate wealth over the course of your life.

Mutual Funds and ETFs

If researching individual stocks feels overwhelming to you, mutual funds and exchange-traded funds (ETFs) could be viable options to invest your money in. Let’s use a S&P 500 ETFs as an example. Rather than owning individual stocks, you would own a fund that consists of the companies within the S&P 500. There would be less risk involved with owning the ETF due to the amount of diversification within those 500 stocks.

Mutual funds are very comparable to ETFs in that they pool money from various investors to purchase a diversified portfolio of investment options. The selection of the stocks, bonds, etc. that are in the mutual fund are managed by a fund manager. There are more trading restrictions with mutual funds compared to ETFs, as mutual funds tend not to be as liquid.

Real Estate

Real estate can be another popular option to invest your money in. Investing in real estate can be done by investing in physical property, whether it’s residential or commercial. It can also be done via real estate investment trusts (REITs) or real estate stocks. The opportunity of investing in real estate can provide income if the value of the property appreciates or if you choose to rent your property.

What You Should Invest Your Money in Depends on Your Situation

These are really just some of the basic places where you can invest your money in. The key thing to reminder with investing is to not make knee-jerk reactions that can be spurred by fear and greed. Think about this. Is making as much money as possible the most important thing in your life? Hopefully not. It’s probably spending time with family, traveling, etc., like we mentioned earlier. How are you going to fund those things that are important to you?

Those aren’t decisions that should be taken lightly. That’s why it’s so important to consider your risk tolerance and your goals as you’re deciding what to invest your money in. Having all your eggs in one investment basket could be fruitful for a brief amount of time, but what if that investment starts to yield poor returns? That’s not worth the risk. Having a wide range of diversification in your investments and the duration that you’re holding them is critical with mitigating potential risk.

Stress Testing Your Financial Plan

We’ve lost track of how many times we’ve explained that an investment plan and a financial plan aren’t one in the same. An investment plan needs to be part of your financial plan. As we’re building your financial plan, we’re going to keep your goals and risk tolerance top of mind. When it comes to different risk factors, whether it’s investment risk, health risk, or anything else that can derail your retirement, we’re going to stress test your plan. That means we’re going to see if your plan could withstand a market crash, sudden health-related issue, etc.

Just because those things are unexpected doesn’t mean you can’t plan for them. It’s quite the opposite. It’s pivotal to plan for them. We talk about stress testing for various risks throughout our Retirement Plan Checklist. It’s comprised of 30 yes-or-no questions that gauge your retirement readiness and an age-based timeline that covers several key retirement considerations. Download your copy below!

What Should I Invest My Money In?

Retirement Plan Checklist

Do You Have Any Questions?

So, we don’t have a clear-cut answer for what you should invest your money in because we don’t know how you think and feel about money. We need to know what your money needs to do for you, and therefore, what’s important to you.

That all requires planning that needs to be done well before retirement rather than right beforehand. Getting started can be the hardest part, which is why it’s critical to have a team of professionals that works for you. Our team consists of CFP® Professional, CPAs, CFAs, estate planning specialists, and risk management specialists—who work together in collaboration for our clients. Figuring out what you should invest in is one of many things our team works together on.

To learn more about what this process could look like for you, start a conversation with us here.

Schedule a Meeting

Remember that getting an answer to what you should invest your money in shouldn’t be a sprint. All the forward-looking questions throughout the financial planning process need to be well thought through. While that can feel like a marathon, it’s all at your pace and there’s a team of professionals that’s ready to help you every step of the way. We want you to enjoy the money that you’ve worked so hard for.

What Should I Invest My Money in? | Watch Guide

00:00 – Introduction
– What Do You Need Your Money to Do?
– Why a Financial Plan is Crucial
– The Cycles of Spending in Retirement
– Stress Testing Your Plan
– The Role of a Financial Planner and CPA
– Why When You Retire Matters
– What We Learned Today


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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.

The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.