The best place to invest money really depends on the
individual doing the investing. To determine which place to
park your funds depends on how much risk you can handle and
what type of time frame you are working with. This article
will describe a few low risk options for investing funds
along with a few high risk options for investing.

If someone asked me what the best place to invest money
was, I would present them with a few different investment
strategies and explain the expected return and the risk of
each of those investments.

For someone who is very risk averse (one who avoids risk),
I would recommend a fixed income security or a money market
account. A money market account is similar to a normal bank
account except it pays a higher interest rate. ING Direct
offers money market accounts and sometimes offers a sign-up
bonus. The interest rate from these types of accounts are
normally around the rate of inflation.

For someone who can accept a moderate amount of risk, they
should consider an index mutual fund. An example of this
would be the Vanguard 500 mutual fund. This fund has
extremely low fees and is a basic copy of the S&P 500. The
reason this carries moderate risk is because it is a
diverse mix of fairly conservative stocks. This specific
fund has an average annual yield since inception of 10
percent.

For someone who can accept a high risk, they should
consider trading individual stocks. This option takes a
great deal of research and a strong heart. Stocks can jump
or crash 20 percent or more on a single day. If you are not
careful it can turn into a form of gambling. There are many
online stock trading brokers to choose from (Etrade,
Charles Schwab, Trade King, Sharebuilder. com). The key to
success in stock trading is research, have a strategy and
don't emotionally invested in a certain company.

If risk doesn't matter at all, there is also the Forex
market. This is the foreign currency exchange. In this type
of trading, you can open an account with a broker who will
provide you a margin of up to 200 times your original
investment. Small swings in currency rates can lead to huge
profits, but it can also wipe out your entire investment in
a matter of seconds. For a comprehensive guide to investing
in the Forex markets see www.babypips. com. It should be
noted that most traders recommend using a practice account
for at least six months before deciding if the forex market
is right for you. To sign up for a practice account see
www.forex.com.

The most important thing to think about before you begin
trading is what you can afford to lose. If you are working
with funds that your family will need in the near future,
stick to something safe. It will not provide the return of
stocks, but it will also not wipe out your family's quality
of life.