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Assuming you have no significant credit card debt, have a low interest rate on your student loans, and have enough income to cover your mortgage and/or car payments, contribute the maximum to your 401(k), and make a yearly contribution to an IRA or Roth IRA, you're in a position to invest.

You have three basic options: stocks, bonds, and cash. Most financial advisers argue for diversity in your portfolio, which means choosing all three options at once.

A rule of thumb that some experts use is a ratio of 80:20 ratio of stocks to other conservative investments like bonds if you're 20+ years away from retirement. If you're looking for a less aggressive option than stocks right now, go with mutual funds, which you purchase from an institution and require less research and daily upkeep because they give you automatic diversification. As for cash, consider an online savings account, a money market account, or high-yield CDs.

Nestpert Brett Graff, The Home Economist and former government economist

-- The Nest Editors

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