Will

In the past, some people on this forum have suggested that if a person has a modest sum to invest, and doesn't have lots of time to devote to following the markets, then buying individual stocks (on average) will make you less money than sticking with a market ETF. However, the markets right now are very near the price they were in 2007 at the height of the market, right before the crash. With the fiscal cliff looming, are ETFs still a safe bet, or would I be better off with money market accounts and CDs for the next couple of years?

Will

I guess what I meant to ask about were market index funds.

magician

Sorry for the delayed reply: things have been busier than can be this time of year.

Whether you're talking about market index funds or (market index) ETFs, the answer's the same: they're both efficient ways of creating a well-diversified portfolio.

The primary concern in the near future, I believe, is that inflation will increase. This will increase the (nominal) returns on CDs and money market funds (broadly, fixed income), but will also increase the nominal returns on equities; thus, it's not a strong argument to move from equities to fixed income or vice versa. Your best bet if you want to be a realtively passive investor is to invest in some mix of equity and fixed income index funds.

You might want to look at Bogleheads for lots of good advice on investing; they're adamantly pro-index.