The Smartest Ways to Invest Your Money, According to Experts

When you haven't invested much, or at all, it's normal to feel unsure about how to do it. Investing can seem complicated, which unfortunately causes some people to avoid it entirely.

It helps to have advice from experts with a proven track record of success. Below, you'll find straightforward advice from the experts that can help you get started and be a successful investor.

Stick to quality investments

We'll start with a smart rule from investing legend Warren Buffett, that he learned from long-time partner Charlie Munger. Buffett says, "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

The moral is to always look for quality first in an investment. Quality companies stand the test of time and often become the most profitable investments.

This doesn't mean you need to invest in specific companies. You can look for wonderful companies like Buffett recommends. But you could also look for quality index funds. These invest in the companies that make up a specific market index.

For example, Buffett has also recommended investing in an S&P 500 index fund. This will spread your money across 500 of the largest publicly traded companies. It's one of the easier ways to invest, and it's also a reasonably safe option. The S&P 500 has averaged a return of about 10% per year for the last century.

Hold investments for at least five years

This one comes from The Motley Fool Investing Philosophy. Whenever you invest, plan to hold onto that investment for at least five years, through good times and bad.

While the market has consistently grown over long periods, it's volatile from year to year. There are years when it has increased by 20% or more, and also years when it has decreased by that much. So with short-term investing, you're rolling the dice.

Long-term investing maximizes your chances of success. There will be market downturns, but don't let them convince you to stop investing or to sell off your stocks, two common mistakes. Downturns can be an opportunity to buy more of the investments you love at a discount. Selling during market volatility is what you don't want to do, because you'll be selling low.

Make it automatic

Ramit Sethi, author of I Will Teach You To Be Rich, believes in making personal finance as simple as possible. That includes investing.

Like many experts, he recommends investing in low-cost index funds. He also recommends that you automate your investments and move on with your life. Decide how much money you want to invest per month -- 10% of your income is a good starting point. Then, set up a regular purchase of the investments you like.

You can set up automatic investments with practically any type of investment account, including:

• Your 401(k) at work: Choose how much you want to contribute from each paycheck and where you want to invest it.
• Individual retirement accounts (IRAs) with a stock broker: Choose the amount you want to invest, how often, and the bank account you'll use to pay for it.
• Traditional brokerage accounts with a stock broker: Just like with IRAs, choose an amount, how often to invest, and a bank account to fund it.

Use savings accounts and CDs for short-term financial goals

The stock market is one of the best places to invest for long-term financial goals, such as retirement. It's not the right place for short-term goals. A helpful rule of thumb, courtesy of The Motley Fool's guide on saving versus investing, is to only invest for goals that are more than five years away.

So, if you're getting married in a year, you should save for that. The same is true if you plan to buy a house in three years. It isn't a good idea to invest for these short-term goals, because the market could go through a downturn before you need the money. Instead, use one of the following:

• High-yield savings account: A savings account with an above-average APY. Rates on some of the best options are over 5% right now, but they can go up and down over time.
• Certificate of deposit (CD): A deposit account with a fixed term and interest rate, such as three years with a 5.15% APY. You must keep your money deposited for the full term to avoid an early withdrawal penalty. The advantage with CDs is you can lock in a high interest rate.

Investing well is easier than people realize. You don't need to spend hours every day looking at price charts. For retirement and other long-term goals, pick quality stocks or index funds, hold onto them for at least five years, and set up automatic investments so you're continually buying more. For short-term goals, stick to savings accounts or CDs, where your savings will be safe and not at risk of dropping during a market downturn.