What should I do with $500 to invest?

You have some good choices if you're starting with $500 or a similar amount. You could use a robo-advisor to start an automated investment account and add to it periodically. With more brokers offering fractional share investing, you can even create a diverse portfolio of individual stocks with an initial investment of just $500.

How do I find undervalued investment opportunities?

The best way to find undervalued investment opportunities is to learn the basic principles of value investing and then apply them to your stock analysis. You can learn how to identify overlooked and undervalued stocks without complex mathematics, and this approach can be a great way to build a portfolio.

Should I invest during a market downturn or wait?

Investing during a market downturn can be a great move from a long-term perspective, but it can understandably be nerve-racking when the market is volatile. As a result, the best practice for most people is to invest incrementally over time, regardless of the stock market's performance.

How often should I review or change my investments?

There's no perfect answer, but at the very least, you should conduct an investment check-up quarterly. If you own individual stocks, they are required to report their latest results once every three months. Plus, a periodic check-up is a great time to review your asset allocation and see if any portfolio rebalancing is needed.

What are some less risky investment options?

CDs, high-yield savings accounts, and Treasury bonds are all low-risk investments. But it's important to know that even within the stock market, there's a wide spectrum of risk. For example, investing in an ETF that owns 1,000 dividend-paying stocks and investing in an individual artificial intelligence (AI) growth company are two very different things.

How do short-term and long-term investments differ in risk?

There's a wide variety of risks in both short- and long-term investments. For example, there are some short-term investments (such as Treasury bills) that have virtually no risk. On the other hand, day-trading is a short-term investment that is one of the riskiest things you can do with your money. The same can be said for long-term investments. Putting your money into a 30-year A-rated corporate bond and buying shares of an artificial intelligence stock to hold for the long term are on two different ends of the risk spectrum.

What to Invest In: Use Your Money to Make Money in 2026

9 Best Investments for 2026

By Matthew Frankel, CFP – Updated Mar 5, 2026 at 4:13 PM EST | Fact-checked by Frank Bass

Key Points

A diversified portfolio combining stocks and bonds is optimal for most investors.
ETFs offer a simpler alternative to picking individual stocks.
Investing in U.S. stocks is historically akin to betting on American business growth.

A wisely crafted investment portfolio can build tremendous wealth over time. Investing money the right way can help send your kids to college, plan for a comfortable retirement, or meet any other financial goals.

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A diagram explaining two types of stock market risks, volatility and permanent losses. — Image source: The Motley Fool.

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Stock

A stock represents an ownership interest in a business. When a business wants to raise money, its board of directors determines the number of shares to issue.

Stocks have outperformed most investment classes over almost every 10-year period in the past century.

The S&P 500 benchmark index has historically averaged annual returns of 9% to 10%, depending on the time interval under consideration. To put returns like this into perspective, a $10,000 investment compounded at 10% for 30 years would grow to almost $175,000.

As legendary investor Warren Buffett puts it, investing in U.S. stocks is a bet on American business. This has been an excellent bet for more than two centuries.

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Dividend Income

Dividend income is defined by the IRS as any distribution of an entity's property to its shareholders.

2. Exchange-traded funds (ETFs)

If researching and selecting individual stocks doesn't sound like your thing, that's perfectly fine.

An alternative is to invest (either exclusively or partially) in exchange-traded funds, or ETFs. The basic idea is that ETFs trade on major exchanges like stocks, and your money is invested to achieve a stated objective.

For example, if you invest in an S&P 500 index fund, your money will be spread out among the 500 companies that make up the index. The value of your investment should track the index's performance over time.

3. Mutual funds

Mutual funds are similar to ETFs. They pool investors' money and use it to accumulate a portfolio of stocks or other investments.

The most significant difference is that ETFs trade on major stock exchanges, and you can buy shares whenever the stock market is open. Mutual funds price their shares only once a day and aren't nearly as liquid.

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4. Bonds

Over the long term, accumulating wealth is the primary focus. But once you've built that wealth and are closer to retirement age, bonds -- which are loans to a company or government -- can help you stay wealthy. There are three main kinds of bonds:

Corporate bonds issued by companies
Municipal bonds issued by state and local governments
Treasury notes, bonds, and bills issued by the U.S. government

For most investors, the best way to go is to buy ETFs and mutual funds that invest in bonds on your behalf.

The main goals of investing in bonds, as opposed to stocks, are capital preservation (preventing losses) and income generation.

5. High-yield savings accounts

Savings accounts offered by branch-based banks are notorious for paying minuscule interest rates.

On the other hand, some excellent banks, primarily based online, offer very competitive rates -- to the point that they can be considered investment-worthy in many cases. As of January 2026, savings account interest rates in the 3.5% ballpark (or higher) were still readily available if you do a little research.

6. Certificates of deposit (CDs)

Many reputable banks offer excellent high-yield certificates of deposit (CDs). These pay guaranteed yields for anywhere from a few months to five years or more.

Unlike savings accounts, CDs allow you to lock in a specific yield for a set period. This can be an especially valuable feature when interest rates are relatively high, and you want predictable returns.

The Federal Deposit Insurance Corp. (FDIC) insures CDs and savings accounts up to $250,000 per person per bank to protect you against bank failure.

7. Real estate

Like owning great companies, owning real estate can be a wonderful way to build wealth. In most periods of economic recession throughout history, commercial real estate has performed rather well. It's often viewed as a safer, more stable investment than stocks.

There are ways for people at almost every financial level to invest in and make money from real estate. The most obvious option is to buy a rental property, which can be a great way to build wealth and create a steady income stream. However, this isn't the best fit for everyone.

Fortunately, there are alternative ways to invest in real estate. Many, such as real estate investment trusts (REITs), are much more passive than actually becoming a landlord.

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Passive Income

There are many ways to build wealth, and passive income is a simple one. Learn all about passive income and how you can start building wealth today.

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Stock Market Volatility

Stock market volatility is a measure of how much the stock market's overall value fluctuates up and down.

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Types of investment accounts. IRA = individual retirement account. SEP = simplified employee pension.

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The biggest takeaway here is that you should choose the appropriate kind of account based on why you're investing. For instance:

401(k): for employed retirement savers.
SEP IRA/Solo 401(k): for self-employed retirement savers.
Traditional IRA: for retirement savers.
Roth IRA: for retirement savers.
Taxable brokerage: for savers with additional cash to invest beyond retirement/college savings account needs or limits.
Coverdell Education Savings Account: for college savers.
529 College Savings: for college savers.

So, what should I invest in?

To be perfectly clear, every investor is different, and no one pathway works for everyone. However, the best answer for most people is a portfolio that combines stocks (or stock-based ETFs and mutual funds) with fixed-income investments, such as bonds and CDs.

One popular asset allocation guideline used by financial planners, known as the Rule of 110, is to subtract your age from 110 to determine the approximate percentage of your portfolio that should be in stocks. For example, according to this rule, a 40-year-old should have roughly 70% of their money invested in stocks and stock-based funds.

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Best investments: FAQ

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

TMFMattFrankel

@MattFrankelCFP

Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

How to determine your investment strategy

The best way to determine which of the investment types are the best places to put your money is to carefully consider the factors discussed in the previous section. Use them to craft an investment approach that makes sense for you.

As an example, I consider myself to have a reasonably high risk tolerance. I'm 43, so I'm about 2 decades away from retirement. Because of what I do for a living, I have extensive experience evaluating individual stocks. So, my investment strategy consists mainly of a diversified portfolio of individual stocks with a few ETFs in both retirement and standard brokerage accounts (more on those in a bit), some money in CDs, and an investment property.

What type of investment account should you use?

Owning the right investments will help you reach your financial goals. But where you invest can be just as important. Many people, especially new investors, overlook the tax implications of their investments, which can leave them falling short of their financial goals.

Simply put, a little tax planning can go a long way. Here are some examples of different kinds of accounts you may want to use on your investing journey:

Best sectors for investment opportunities

Of course, the best places to invest can vary, depending on your personal investment goals and risk tolerance. However, to give you some ideas, here are some of the top sectors to consider investing in as we head into 2026.

Technology - Technology is where some of the most exciting investment opportunities live. You're probably well aware of the boom in artificial intelligence (AI) in recent years, and there are other tech trends, such as autonomous vehicles, Internet of Things (IoT), and cybersecurity, that have tons of interesting opportunities.

Financials - Although it's not as exciting as technology, the financial sector could be a great opportunity, especially as interest rates decline. Not only would lower interest rates reduce deposit costs, but they would likely increase demand for loans.

Energy and industrials - Global energy demand is rising faster than many had expected, fueled by the massive power demand of AI infrastructure (data centers). Investing in businesses that help address these energy challenges sustainably can be a smart strategy.

9 Best Investments for 2026

Key Points

Stock