I was recently able to pay off my school debts (yay!), and now I had the opprotunity to save some money. I want to put away anywhere between $10-$20K for a period of up to 5 years. I am in my late 20s and know that probably in 5 years time I would purchase a place and could use the extra $. I will likely do some traveling, moving around beforehand, and want to put the money away so I don't burn it.

I know there is a plethora of investment options. Real estate (like buying and renting a place out) is good because of the market, but in all honesty this is not enough money to buy and rent anything in my area. As far as markets go, different people have different opinions - some say stocks, mutual funds, other says those are a zero sum and risky. Others say money market and savings, maybe a couple of CDs. My friend said maybe do a Fidelity fund.

I know that there are a million options, but I wanted to see what people here would recommend.

Thanks!

One of the first rules of investing is that if you need the money in about 5 years or less, keep it in very safe places: FDIC insured savings or CD, or money market accounts. Don't try to make more money with other types of investments. The same thing applies to your emergency fund.

Edited to add: For longer term investing, read this great article. I mean really, really read it.

The Best Investment Advice

You might look at IRA options, I believe some allow no fee withdrawls for purchasing a home... I believe it is the roth? you might want to look at that... yeah for tax free gains.

Yeah I think Roth IRA would be good for you if you definitely want to buy a house. You will be able to withdraw up to $10,000 for related to a house purchase (I think this includes down payment and not just closing costs) without penalty. Since it's a Roth you can withdraw contributions at any time, but the 10K for a house includes interest/dividends/capital gains, which normally would incur a 10% penalty.

As to what you should invest in, 5 years is a short time so you should stick to conservative investments. On the other hand you are young and maybe you should just go with the typical retirement blend for your age, something like 10% bonds and 90% equities. Maybe in 5 years you'll decide not to buy a house anyway.