There is no single "best" way to invest any amount of money. Instead, you should determine what you want your money to do for you, in terms of investment income and future liquidity--that is, the availability of the money. Once you have determined your investment goals, choose the investment that meets those goals, and you'll have found your own personal best investment.

Short-Term Investment Strategies

If you will be needing your money at some point in the near future, you should choose the investment that provides the best possible rate of return, but which also frees up your money when you need it. A money market account provides excellent liquidity--you can withdraw your money at any time--and generally offers a higher rate of return than an equivalent checking or savings account. However, while money market accounts are considered safe investments, they are not insured by the Federal Deposit Insurance Corporation in the event of bank failure. For perfect safety, stick to FDIC-insured accounts. If you know that you can safely invest your money for months or years, consider investing in a certificate of deposit (CD). CDs pay a fixed rate of interest for a fixed period of time, but you are not allowed to withdraw your money before the CD matures. CDs typically pay a higher rate of interest than savings or money market accounts.

Long-Term Investment Strategies

Stocks are better investments for longer time periods. Stocks may lose value over time, and are exceptionally volatile in short time periods, but historically the stock market has provided the best rate of return over a long time. The safest way to invest in the stock market is through a "no-load index fund." An index fund is a basket of stocks which is identical to some market index, such as the Dow Jones Industrial Average or the S&P 500, which guarantees that your investment will track the overall stock market. "No-load" means that the mutual fund does not charge fees for managing your fund, which can eat into your overall profits. If you prefer to choose your own stocks, you should research the market and invest only in companies you personally understand, and believe will grow over time. Give special consideration to stocks that pay dividends, as this represents additional income over and above the value from the appreciation of the stock. Many companies offer dividend reinvestment plans (DRiPs), which automatically invest your dividends into new stock purchases. As these new shares also accrue dividends, this exponentially increases your stock investment over the long-term.

Source:

The Motley Fool: How to Invest $20, $100, and $1,000 (and More)

The Motley Fool: No-Load Index Funds