The terms range from a few months to 30 years and the rates vary. The value of a bond is subject to interest rate fluctuations. If interest rates rise after you buy your bond, you may have to sell it for less than its face value. There are no penalties for selling a bond before the end of the term. That will beat the socks off a CD or a savings account.
Mutual funds are very popular investments and are professionally managed.
A fund manager invests your money in a combination of stocks and bonds and money market accounts, and decides the best time to buy and sell. Because you are investing with a large group of investors, your risk of losing money is diluted. There are several types of mutual funds with varying degrees of risk. Most mutual funds charge fees and you have to pay income tax on your profits. The bottom line when it comes to saving is to begin early, invest consistently and try to put away enough money for college and beyond, says Nissenbaum.