THE BEST PLACES TO PUT YOUR MONEY NOW Feeling cautious? Who can blame you? The economy is mushy, new taxes are headed your way, and even Donald Trump is down to his last $450,000 a month. But don't despair. Even if you have only $1,000, you can still earn handsome profits at reasonable risk.
By Clint Willis

(MONEY Magazine) – When a recent MONEY/ABC Consumer Comfort poll asked 500 people to choose among 12 different ways to invest $1,000, stocks tied savings accounts as the second most frequent selection. First place went to ever-popular bank CDs. But almost as many investors gave a more telling answer: they didn't know what they'd do. Even in boom times, investment decisions are far from easy. And now, when Washington is abuzz with talk of higher taxes and economists are warning that a tax increase could tip the economy into recession, it's difficult to know how to put your money to work. To help you invest sensibly -- whether you are just starting out or you have already accumulated a sizable portfolio -- MONEY asked dozens of investment pros to name the most promising mutual funds, stocks and bonds. ! Their general advice: if you have less than $1,000, choose one of the 25 topnotch funds with low minimum initial investments that are listed on page 70. As your assets grow, keep risk under control by diversifying among three or four complementary funds. And once you have $50,000 or more, cut your costs by purchasing individual stocks and bonds. While most investment advisers agree on broad strategy, they differ on the outlook for specific investments. A few experts are enthusiastic about the prospects for stocks. ''Buy now, not later,'' insists Barbara Rosenblum, a San Francisco investment adviser. ''If you don't invest with the Dow at 2900, you could be looking at 3400 in a year.'' The majority, however, consider the stock market to be moderately overvalued. Some fund managers are even as yellow as Dick Tracy's trench coat; equity fund cash holdings recently stood at a near-record 11%. Our view, discussed at greater length in Money Forecast on page 15, is that you now should be investing defensively. Start off with conservative mutual funds. If you have $10,000 or more and can diversify, keep a larger than usual portion of your money -- say, 30% to 50% -- in income investments. But don't avoid stocks altogether; on average, they are likely to beat inflation by five percentage points annually over the next 10 or 20 years. The stories that follow discuss specific alternatives -- including unorthodox ones for people with mad money -- whatever your appetite for risk and however much you have to invest.