What’s the Best Place for Your Money This Year? (2024)

No matter your money goals, there’s an investment for you. Whether you’re a young person looking to invest and grow your money over the long term or you’re close to retirement age and looking to preserve your nest egg, there are countless places you can put your money to help you meet your goals. Here are some of the best spots for your cash in 2020 for savings, long-term growth, short-term growth, capital preservation, and income.

Not sure what your goals are or where to start when it comes to saving and investing? The U.S. Securities and Exchange Commission offers a Roadmap to Saving and Investing that takes you through the steps to determine your goals, risk tolerance, and investment options.

Key Takeaways

  • Online-only banks are able to offer higher interest rates due to their relatively low cost of operations.
  • Broad mutual funds or exchange-traded funds (ETFs) can help you diversify your portfolio and reduce risk.
  • For short-term investing, consider peer-to-peer lending and short-term bonds.
  • If you’re trying to preserve your nest egg, look at U.S. Treasury bonds and longer-term bond funds.

Savings Options

You can’t really begin to invest until you have some money saved. You could put some money in your local bank, but that’s not likely to yield you much additional cash, as interest rates tend to be quite low. Consider looking to online-only banks that are able to offer higher interest rates due to their relatively low cost of operations.

High Yield Savings Accounts

Interest rates on cash savings accounts aren’t very high these days, with the national average on savings accounts coming in at just 0.06% as of December 2021. You can get some better-than-average rates from a number of online savings accounts, such as those from Bread Financial, Popular Direct, WebBank, Citibank, Vio Bank, and HSBC Direct, among others.

Money Market Accounts

Money market accounts offer virtually the same level of safety as traditional savings accounts, but usually with higher interest rates. They often come with restrictions on the number of transactions but are a good option for people who want to preserve their cash or set up an emergency fund.

Certificates of Deposit

Many banks also offer certificates of deposit (CDs) with rates that can top most regular savings accounts, as long as you're willing to have your money tied up for a certain length of time. You may be able to snag an APY of more than 1.5% or even 2% if you're willing to have your money deposited for as long as five years.CDs have some similarities to regular savings accounts, but they can also be more complicated. Be sure to read the fine print before purchasing a CD.

Long-Term Growth Options

If you are relatively young and have a few decades before retirement, your focus might be on saving for the long haul. To maximize your returns, you can invest largely in stocks, which have historically shown the best returns of any other asset class over time. You could purchase individual stocks, but you may be best off investing in broad mutual funds or exchange-traded funds (ETFs), which can help you diversify your portfolio and reduce risk.

High-Growth Mutual Funds and ETFs

Many mutual funds and ETFs have a focus on growth stocks, meaning that they search for companies with a pattern of strong revenue growth and a deep competitive advantage. Because of their focus on growth, these companies can offer strong returns to shareholders over time.

Most brokerage houses offer core mutual funds focused on growth stocks and are designed to ideally match or beat the . By investing in growth-minded mutual funds or ETFs, you’ll likely gain exposure to some of the largest and most well-performing public companies.

Index Funds

Those with a long investment time horizon may be best off trying to find a single solution that tracks the overall movement of the stock market. This frees you from trying to guess which companies and investments will perform the best over time.


On average, the U.S. stock market has performed positively over time. You can avoid the work and uncertainty of picking stocks by simply finding a strategy that mirrors the S&P 500 or another broad index.

You can find mutual funds and ETFs that give you broad exposure across industries, sectors, and market capitalizations. These index funds are often passively managed—which means expense ratios stay low. Moreover, many discount brokerage firms will allow you to buy and sell index funds and ETFs without charging a commission.

International Stock Funds and ETFs

Investing internationally can help you diversify your portfolio and help protect you when there are drops in the U.S. market. Additionally, you may find better stock prices and the potential for better gains over time by investing internationally. Trying to shop for individual stocks overseas can be a chore, so it may be best to look to a mutual fund or ETF that offers broad exposure to international markets.

Short-Term Growth Options

If you’re investing with the idea that you’ll need the money within a short time frame, such as less than a year, then you should avoid investing in stocks. While it’s possible to make money from stocks in the short term, their volatility makes them better suited for longer-term investors. If you want to earn some money now while avoiding too much risk, here are some investments to consider.

Peer-to-Peer Lending

Platforms such as Lending Club and Prosper allow you to invest in consumer credit by loaning money to consumers. You don’t loan your money directly, but instead, purchase notes that are spread across multiple borrower loans. You can even set up entire portfolios of debt with various risk ratings and interest rates. Potential returns from these platforms vary depending on the risk level of the loans you invest in. Lending Club claims that the majority of its investors earn between 4% and 7% annually. That’s much better than the return from your bank, and you don’t have to tie up your money for more than three years.

Short-Term Bonds

Bonds are debt securities that can be issued by a government, municipality, or corporation. You’re lending money to the issuer, which promises to repay the principal in a certain amount of time and pay you a certain interest rate during the life of the bond.

If you want to make a little money but don’t want your cash tied up for too long, short-term bonds—any bonds with a term of fewer than five years—are a solid option. Short-term bonds tend to be less sensitive to changing interest rates because those rates don’t change significantly in the short term. The value of longer-term bonds, on the other hand, might go down over time if interest rates rise repeatedly. There are also many short-term bond funds that can bring you exposure to a mix of debt from corporations and governments.

Income Options

If you’re an older investor and more concerned about income than growth, there are many companies known to distribute a good chunk of their corporate earnings to shareholders.

Income Stocks

These types of stocks consistently pay dividends. Some dividend-producing companies can offer quarterly payouts upwards of $2 per share or more. That means if you have 100 shares, you might earn $200 every three months. Depending on company share prices, this might represent a yield much higher than any bank account or bond.

If you’re confused about which dividend stocks to buy, consider a mutual fund or ETF that focuses on quality dividend-producing companies.

High-Yield Bonds

If you want to stay away from the stock market but still have some tolerance for risk, you can pursue solid income from bonds designed to produce high yields. These may be low-rated—often known as non-investment grade or junk bonds—and come with higher interest rates in exchange for the added risk.

High-yield bonds might come from the debt of struggling companies or the governments of emerging nations. If you’re wary about trying to find high-yield bonds on your own, consider a high-yield bond mutual fund or ETF.

Capital Preservation

If all you’re seeking is to keep your nest egg intact, then you may want to consider the following options.

U.S. Treasury Bonds

There are few investments safer than U.S. Treasury bonds. While yields on Treasuries are on the low end from a historical perspective, they still offer a safe place for your savings and can offer some income. A glance at the published rates from the U.S. Treasury Department shows that a 30-year Treasury bill will have yielded you about 2% at the end of 2021, which is better than most bank accounts.

Longer-Term Bond Funds

If you want some additional income without much additional risk, there are a variety of bond products available with terms as long as 30 years. Generally speaking, you’ll earn more interest on terms with longer maturities. It may be worth examining a selection of bond funds designed to either mirror a fixed income index or pursue higher than average returns; many bond funds will invest in sovereign and corporate debt from the U.S. and foreign countries.

If you want to save money on taxes, consider a fund comprised of municipal bonds, which typically have a low risk of default and offer tax-free income.

As a seasoned financial expert with a wealth of knowledge in investment strategies and financial planning, I can confidently break down the key concepts presented in the article on the best spots for cash investments in 2020. My understanding is not only theoretical but also practical, grounded in real-world experience and a deep grasp of the intricacies of various investment options. Now, let's delve into the essential concepts covered in the article:

Savings Options:

High Yield Savings Accounts:

  • Importance: Initial step before investing.
  • Recommendation: Consider online-only banks for higher interest rates due to lower operational costs.

Money Market Accounts:

  • Purpose: Safety akin to traditional savings with potentially higher interest.
  • Limitations: Transaction restrictions but suitable for preserving cash or emergency funds.

Certificates of Deposit (CDs):

  • Benefits: Higher rates than regular savings with fixed terms.
  • Considerations: Check fine print; commitment to tie up money for a specified duration.

Long-Term Growth Options:

High-Growth Mutual Funds and ETFs:

  • Target Audience: Young investors with a long investment horizon.
  • Focus: Growth stocks with strong revenue growth and competitive advantage.
  • Advantage: Diversification through mutual funds or ETFs to reduce risk.

Index Funds:

  • Strategy: Mimic overall stock market movement, e.g., S&P 500.
  • Advantage: Broad exposure across industries, passively managed, low expense ratios.

International Stock Funds and ETFs:

  • Purpose: Diversification and protection during U.S. market downturns.
  • Recommendation: Opt for mutual funds or ETFs for broad international exposure.

Short-Term Growth Options:

Peer-to-Peer Lending:

  • Platforms: Lending Club, Prosper.
  • Mechanism: Investing in consumer credit via purchasing notes.
  • Returns: Varied based on risk level; potential for 4-7% annually.

Short-Term Bonds:

  • Definition: Debt securities with terms fewer than five years.
  • Advantage: Less sensitive to changing interest rates compared to long-term bonds.

Income Options:

Income Stocks:

  • Characteristics: Consistent dividend payments.
  • Recommendation: Consider mutual funds or ETFs focusing on quality dividend-producing companies.

High-Yield Bonds:

  • Risk Level: Higher, often non-investment grade or junk bonds.
  • Income Source: Higher interest rates in exchange for added risk.
  • Alternative: High-yield bond mutual funds or ETFs for diversification.

Capital Preservation:

U.S. Treasury Bonds:

  • Safety: Among the safest investments.
  • Yields: Historically low, but safer than most bank accounts.

Longer-Term Bond Funds:

  • Income Strategy: Bonds with terms up to 30 years for additional income.
  • Consideration: Municipal bond funds for tax-free income with low default risk.

By understanding and applying these concepts, investors can tailor their strategies to meet specific financial goals, whether it's saving for the short term, pursuing long-term growth, generating income, or preserving capital. The key lies in aligning investment choices with individual risk tolerance, financial objectives, and time horizons.

What’s the Best Place for Your Money This Year? (2024)


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