[gull]

If you want low risk, use a high-yield savings account or money market account offering 5%+ interest.

However, if you can tolerate the risk of loss, as it sounds you can, then I would advise you invest in index funds. There's no way to go broke with index funds, but as with all stock investments, there's a risk of loss. Historically, however, stocks have climbed at a rate averaging 10% per year, and this high return is what you get in exchange for the risk you assume.

Index funds are not for super fish. They have the same expected returns as individual stocks, but with much less variance. Index funds are just a subset of mutual funds that charge low expenses, typically have low turnover (meaning low taxes), and passively follow an index.

If you choose to invest in index funds, there are two equivalent methods. One way is to invest directly with a fund company. If you do this, use Vanguard. Vanguard has extremely cheap, well-diversified index funds that cover a broad range of asset classes. The second way is to use ETFs. ETFs are a version of index funds that trade on an exchange, like stocks. They will have the same performance as normal index funds. There are a few differences. One difference is cost: ETFs typically have lower expense ratios but you have to pay a commission/spread each time you buy or sell. One small benefit of ETFs is that they cover a few more asset classes than Vanguard alone. It's also a easier to harvest tax losses. But for the most part, it doesn't matter whether you choose normal index funds or ETFs.


The simplest plan:
1) Go to vanguard.com
2) Open an account, and an IRA if possible too
3) Stick it all in Target Retirement 20XX
4) Sit back and relax

(Read the sticky for more information.)