What to Invest In: Use Your Money to Make Money in 2025

8 Best Investments for 2025

By Matthew Frankel, CFP – Updated Oct 11, 2025 at 10:17 PM | Fact-checked by Robin Hartill, CFP

Key Points

Investing wisely helps secure funds for retirement, education, and other goals.
Diversified portfolios, including individual stocks and ETFs, consistently build wealth.
Bonds can add stability to a portfolio and provide investment income.

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.

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Dividend Income

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

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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.
Investing Account Type	Account Features	Need to Know
401(k)	Pre-tax contributions reduce taxes today. Potential employer-matching contributions.	Distributions in retirement are taxed as regular income. Penalties for early withdrawal. A $23,500 employee contribution limit in 2025.
SEP IRA/Solo 401(k)	Pre-tax contributions reduce taxes today. Higher contribution limits than IRAs.	Distributions in retirement are taxed as regular income. Penalties for early withdrawal. A $70,000 total contribution limit in 2025.
Traditional IRA	Ability to roll over 401(k) from former employers. Contribute retirement savings above 401(k) contributions.	Distributions in retirement are taxed as regular income. Penalties for early withdrawal. A $7,000 contribution limit in 2025.
Roth IRA	Distributions are tax-free in retirement, and withdraw contributions are penalty-free.	Contributions are not pre-tax. Penalties for early withdrawal of gains. A $7,000 contribution limit in 2025.
Taxable Brokerage	Contribute any amount to your account without tax consequences (or benefits). Withdraw money at any time.	Taxes are based on realized events (even if you don't withdraw proceeds). In other words, you may owe taxes on realized capital gains, dividends, and taxable distributions.
Coverdell Education Savings Account	More control over investment choices. Withdrawals for qualified education expenses are tax-free.	A $2,000 annual contribution limit; further limits based on income. Taxes and penalties for nonqualified withdrawals.
529 College Savings	Withdrawals allowed for qualified education expenses. Very high contribution limits.	More complicated and varies by state. Very high contribution limits, but fewer investment choices. Taxes and penalties for nonqualified withdrawals.

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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) and fixed-income investments like bonds and CDs.

One popular asset allocation guideline that financial planners use, 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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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.

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@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.