Invest!

If you go with CDs you're guaranteed your original investment plus the interest rate you have locked in. For a five-year CD at 3.75%, that's around $6,010.50 after five years. You can also consider an index mutual fund, like the S&P 500 (symbol: SPY) or the Vanguard 500 index fund (symbol: VFINX). With those, you don't have to make a lot of decisions because you don't have to pick your own stocks and sectors. As long as your horizon is three to five years, you should be in good shape, since historically, the S&P has averaged a 10.3% return since 1929. After five years, that's about $8,052.05. For long-term objectives, you can generally be more aggressive because time is on your side. If you invest about $3,000 in a standard mutual fund, you can use the rest on a riskier, small-stock fund, such as the Nasdaq-100 index (symbol: QQQ). This includes tech companies like Microsoft and Intel, which tend to be more volatile but will yield a higher return over time. Your diversified portfolio could total around $13,750.09 in just five years