3. Consider investing in a CD (certificate of deposit). A CD is for people who don't mind committing their money for a specified period of time at a fixed rate of interest. With a CD, you loan money to a bank or other institution for a certain time period, at the end of which the bank pays you back with interest.

• CDs can last anywhere from a month to five years.
• Generally speaking, the more money you invest in a CD, the higher your interest rate will be. Smaller institutions sometimes pay higher interest rates than bigger ones.
• Say you want to invest $3,000, and you know you won't need the money in the next year. You buy a one-year CD with a simple-interest rate of 5.5%. At the end of the year, the bank gives you back your $3,000 plus the interest, which works out to be $165.