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Individual stocks are risky. It's very hard to consistently/accurately predict the future.

The best way for the average investor to invest is with a fund. A fund owns hundreds of stocks, whose ups and downs cancel eachother out. This effect is known as diversification. With a fund, you get the same expected returns as stock, but with much less risk.

There are a few types of funds. Some are "actively managed" and typically charge high fees. Others are known as "index funds" and charge low fees. Costs will hurt your returns. History shows that actively managed funds fail to beat index funds.

For these reasons, index funds are your best bet because they have the same high returns as stocks, are very diversified, and are low cost.


There are a number of ways to invest in index funds.

1) Get a good financial advisor. If you have hundreds of thousands of dollars, you can afford to have a good financial advisor manage your assets for you. They will help determine an asset allocation for you and maintain your portfolio.

2) Invest in index funds directly with a fund company. Vanguard is the best company to invest with directly. They offer a wide selection of extremely low-cost index funds.

3) Invest in exchange traded funds that follow an index. These work very similarly to index funds and will offer the same returns. The only difference is that you buy and sell these on an exchange through a brokerage, just like stocks.



Here's a great and simple way to start:
Go to vanguard.com
Open an account.
Deposit money.
Invest it all in a target retirement 20XX fund.
Sit back and let it grow.