Boy, I wish I knew at 21 what I know today. I certainly made a whopper of an investment error in my early days of adulthood.

When I first began investing for my retirement, I followed the advice of a co-worker and put all my 401(k) retirement money in bonds. “You can’t trust the stock market,” he told me.

Well, during the time I was in bonds, the stock market soared. The returns on my mutual bond funds were pitiful.

I made a classic novice mistake – getting my investment advice from an unqualified source. It didn’t occur to me that my co-worker was basing his advice on his own situation. He was close to retiring and had an ultraconservative money style.

I eventually realized my mistake and rebalanced my 401(k) portfolio. Still, I could kick myself. But you live and learn, right?

I’m thrilled when I get questions from college students and recent graduates during my regular online discussions at www.washingtonpost.com. For example, here’s a good one from a graduate: “I am trying to purchase a home in the next two years, what would be a good place to start investing the money I have started saving?”

First, let me define investing. It means to commit money with the expectation of a financial gain. It also means you are putting your money at risk.

If you are saving up for a home or you need it for any other reason in the next five years, you do not want to invest this money.

As an investor, you want to give your money both time to grow and also time to weather the ups and downs that can happen with stocks and bonds, whether they are purchased individually or within a mutual fund.

So for these purposes, consider stashing your cash in a money market deposit account, a money market mutual fund or several CDs that mature during the next few years.

There is a difference between a money market deposit account and a money market mutual fund. A money market deposit account is an interest-earning savings account offered by an FDIC-insured financial institution with limited transaction privileges. The interest rate paid on such an account is usually higher (but not always) than a regular savings account.

A money market mutual fund is not federally insured. When you invest in these types of funds, your principal is not guaranteed. But the risk of losing money is extremely low. Money market mutual funds usually invest in Treasury bills, bank CDs and high-rated corporate bonds. Usually this account will pay higher than a money market deposit account. Shop around for the best rates (www.bankrate.com is a good source) and be mindful of fees you may be charged.

– Michelle Singletary is a columnist for The Washington Post.