First off, I think it is great that you are so young, debt free and willing to begin now investing in your future!

I recommend starting a Roth IRA account and funding it to the max each and every year. You can buy mutual fund(s) in the Roth account or any investment you like.

Some folks have started buying ETFs, but I think an IRA should be very stable and low risk. Mutual funds are not very sexy and exciting but they get the job done for long term, safe investing. You can buy ETFs and stocks with discretionary investment funds AFTER you fund your IRA to the max each year. I would suggest either a large cap American or global fund (or both), with a decent balance between stocks and bonds, roughly 70% vs. 30%, respectively, to begin an IRA.

Most mutual funds (MFs) require a starting deposit between $1,000-$2,500, with $50-$100 minimum additional deposit, which you can set up to be monthly. I send a check every month to my IRA MFs, taking advantage of dollar cost averaging.

There is a wealth of information on the internet regarding MFs, but a lot of it is paid advertising. I suggest that you go to your library and check out some book(s) like 'Mutual Funds for Dummies' or some other book targeted directly at MFs. Even if you just read the chapters about what to look for in a MF, you will learn what you need to make the required educated decisions. One thing to definitely look for is how well a MF preforms in bear markets AND bull markets.

This is a long term investment choice, so definitely take your time and do some homework when deciding what to get and don't forget to diversify your investments! If you get more than one MF, make sure they aren't invested in all the same companies.

Good luck!

Here, here! Great job on looking towards the future at your age. The fact that you're starting this conversation at your age versus in 10 or 20 years shows wisdom.

One distinction that might help. There are accounts (Roth IRAs, 401ks, etc.) and there are asset classes in those accounts (mutual funds, stocks, bonds, etc.). I remember learning about these things and I got tripped up in that area. So the questions to ask are where to put the money (account type) and what to put the money in (asset class). You've already answered the Why and the When.

Another idea tacked on to Pants' suggestion: after you fund an emergency fund for unexpected expenses, consider a Target Date Mutual Fund. They are long-term mutual funds that are higher risk (and preferably higher return) in the early-years and lower risk the closer you are to retirement.

Thank you both for your insight.

What do you think of ING Direct for the Roth IRA. They have something called a Roth IRA savings account. Is this the same thing? It doesn't appear they allow you to do much in the way of modifying your assets in the IRA once you've contributed, but maybe I'm overlooking it.

I think ING Direct has expanded their offered products to include mutual funds, common stocks, ETFs, etc. I think it is really a choice of which company you want to send your money to; most offer the same products now. Just do the research to find the lowest commission rates and you should be fine.

I have a savings account with ING Direct and have no complaints so far....Not sure about the IRA option, but I am sure they are equally diligent in their customer relations regarding all of their various financial options.

The Roth Ira is definenetly a good way to go..I am 25 and i have an ira account set up with an investment company that has a high fixed rate and it doubles my money every 4.5 yrs. After doing alot of research on many different companies and talking to alot of business people i fiinally decided to go with this company and it is awesome i also receive quarterly statements so i can see my money grow and the good thing is they let you start an IRA or you can roll over your IRA or 401K ... JUST STAY AWAY FROM THE STOCK MARKETS

Being an investor for over thirty years, I can tell you you are on the right track. Let me give you sound advise, Stay liquid. Stocks are a good place to be. Just not yet. Market conditions today are unparalled and further declines are coming. We are not out of the woods yet. Use this time to learn what asset class you have an interest in. Is it commodities stocks, realestate etc.?

The bggest mistake early investors make is joining ithe "herd" mentality. Take an online edcuation class. You can find them for under $1000.00 In other words invest in yourself first. this is the time many sweepstakes are taking place that you can win thousands of dollars of financial educational courses. Waht ever you do invest in yourself with education first!