Is money better in the bank...or invested in stocks/funds?

Well it depends... If you are going to be using the money for retirement, and are going to need in in the near future, I would keep it out of the stock market and in bonds. However, overall, investing in the stock market brings significantly higher returns than any other investments, but as you mentioned, there is risk involved. If you are looking for an investment safer than the stock market with higher returns than a savings account, I would recommend bonds (especially municipal bonds which are tax-exempt).