What's the best $10,000 investment to make in your 20s? --Fernando Delgado Jr.

So you're a young person who has some extra cash on hand. What should you do with it?

It comes down to two things: Your time frame and how much risk you're willing to take.

Are you aiming to purchase a home or a car in the next few years? Or do you want to save up for something ten years down the line? Outlining your goals will help you determine what to do with your money.

For short-term investments

If you're hoping to make a big purchase in the next few years, consider safety first. The safest investment is a savings account. You'll earn some interest on your money without having to take any risk. And you can access it at any time. Problem is, interest rates are currently very low. Your best bet is to open an online bank savings account, which usually pays a higher interest rate. Right now, you can get a rate of about 1.2%, says George R. Gagliardi of Coromandel Wealth Management in Massachusetts. These accounts, he says, are also FDIC insured, "so your money is safe until you need it."

Related: How to invest without losing money

For long-term investments

If you've got a little more time -- say, 10 years or more -- consider a Roth IRA. It's a retirement savings account with tax benefits. You can chose your own investments and you won't have to pay tax on the earnings. "A Roth IRA will accrue tax-free and will eventually be withdrawn tax-free, which will make a huge difference in forty or so years at retirement," explains Gagliardi.

Another advantage of a Roth IRA? If you're desperate, you can withdraw how much you invest at any time, tax-free. But only withdraw if you must, Gagliardi warns. You're better off keeping it in there until retirement. "I would only recommend doing so in the event of an emergency, as the power of compounding combined with the tax-free structure of a Roth is hard to beat."

The downside is you won't be able to invest the full $10,000. The government only allows an individual to contribute up to $5,500 per year. Plus, you can only contribute if you make below a certain income limit.

Related: 4 reasons to love the Roth IRA

If you're feeling risky

"If you're looking for a one-time investment, a great place to put it would be an S&P 500 index mutual fund or ETF," suggests Ryan Fuchs, a financial planning adviser in Texas. You can do this by opening an after-tax brokerage account. While you won't get the tax advantages you would by investing through an IRA, you can invest the entire $10,000 at once without any restrictions on withdrawals.

"The historical return of the S&P 500 suggests that $10,000 could double at least four times over a forty-year period" he says, adding that historical performance doesn't necessarily indicate future success. In theory, your $10,000 could turn into about $160,000 without adding another dime to your initial investment by the time you're in your sixties, Fuchs explains.

You could also look into other stock market options beyond S&P 500 stocks. "There are many exchange traded funds and index funds that can give you broad global exposure for a very low fee," Gagliardi says.

But stay away from putting all your money into a single stock, Fuchs warns. Diversification spreads the risk around.

Related: How to invest for lifetime income and long-term growth

Another idea? Keep it in cash!

"I am going to buck the trend here and tell you... to put that $10,000 in cash," suggests Douglas A. Boneparth of Bone Fide Wealth in New York. Even if you already have a three to six-month cash reserve for emergencies, liquidity is important for cash intensive-goals like buying a home and starting a family.

"In your 20s, having liquidity is super important. Life tends to be more in flux than when you're older," he says. "Cash is your friend here!"

Related: How to buy your first home

Finally, consider investing in yourself

David E. Hultstrom of Financial Architects in Georgia suggests considering your long-term returns if you invest in your own education and skills.

An advanced degree will cost you more upfront in terms of tuition and the cost of lost wages while you're in school, but consider the higher wages you earn throughout the rest of your life. It might even give you bigger returns than the current stock market.

The opportunity cost is lower the younger you are when pursuing higher education. Yes, it will cost you more the first few years while you're in school and not earning a salary. But you could theoretically be earning more for the rest of your life afterward.

Related: When does it make financial sense to get a graduate degree?

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