<prompt> Human: Im a recent college grad and will probably be living at home for the next year or two. Other than maxing out my 401k, I dont do anything else with my income but id really like to. My dad recommended penny stocks but I dont know anything about investing. Maybe I should take a class? I see alot about Roth IRAs and CDs here but I dont know what of my income i should be putting into these. If you have any other recommendations please let me know, thanks in advance!Assistant: So youre maxing out your 401k ie 18,000 a year and you have how much left over to invest? 18k a year is 25 of your income pre tax so thats really good. Now if youre still building cash and need more places to put money. Go open a roth IRA at vanguard. You can put 5,500 into it. A roth ira is pretty much like a 401k but you put the money in after you pay taxes, and then when you go to retire you dont pay any taxes on that money ie your gains If you still have money left over after that roth IRA, and you have a high deductible health insurance plan you should max out that HSA. thats 3,350 a year. The nice thing about this is you will reduce your taxable income like a 401k does by the 3,350. Also you can invest that money and it can grow. If you dont spend it now you can in retirement spend it for whatever you want as if it were a 401k. But if you do spend it on health costs you dont pay taxes on the money earned Whatever you do avoid penny stocks or any advice from someone who says to invest in penny stocks. Human: amazing advice! Seriously, the detail behind the reasoning is very helpful. Why are penny stocks so bad? Is it just because they are so high risk and hard to predict?  <response>: high risk and the vast majority are scams. People end up dumping way too much money into them because their ceos are there for one thing to sell stock not run a business so people end up dumping their life savings into a company that isnt selling anything other than stock. Just avoid them. Nothing wrong with learning about investing, but stay away from penny stocks. The people who fall for them are the same people who have a prince in Nigeria that wants to send them money... 