Jer and JD -
What might you suggest as something riskier than index funds? Did you mean speculating and picking my own stocks?
Picking your own individual stocks, unless you have an idea of what you're doing, could be a recipe for disaster. If you do
know of something that you think is likely to give good returns, go for it, but if you don't, it's probably best not to try. Most people can't do that arbitrarily, even professionals, and when I say to take on more risk, I don't mean to be silly.
But there are funds that aren't designed to be as "safe" or diversified as, say, an S&P 500 index fund. Those can give much better returns, though with greater risk. One example, and I'm not necessarily recommending it: I own a bunch of shares in FXI, an index fund tracking large-cap Chinese companies listed on the Hong Kong exchange. The returns are very high. It's also a bit of a roller coaster -- it goes up or down 1-2% on any given day, and sometimes more. On the other hand, I've got more profit (unrealized, as yet) on that one investment this year than all
of my other investments combined.
It's a good idea to get a bit of background on something like this -- in this case, it's important to realize that while China's economy is blazing, the market is in a bubble, and the whole thing could blow up at any moment.
So that's the kind of thing I mean. Picking individual companies, unless it's something that you know well, is like a monkey throwing darts at a list of stocks. But if it's something you know, there's no reason not to put some small amount into them at this point. Just realize that the market -- in the US and most of the world -- is in a crazy bubble right now. More reminiscent of 1929 than 2000, really. So take care.