Here's part 3 of a Money magazine series on 10 rules for building wealth that I'll be covering over the next few days. Today their suggestion is to invest in index funds. The details:
If you have a full-time job and it's not picking stocks, acknowledge that. Choosing three or four index funds - say, an S&P 500 fund, an EAFE fund, and a small-cap stock fund - will give you broad exposure. ETFs (low-cost mutual funds that trade like stocks) are also an easy way to invest in more exotic asset classes, like commodities. If you're close to retirement, consider life-cycle funds from Vanguard or T. Rowe Price, which will automatically rebalance your account according to your goals.
As I'm sure you could guess, I am in total agreement with this recommendation. I use index funds as a major part of my investment portfolio. My only regret with them is that I wish I had started investing in them earlier. ;-)
For more thoughts on investing, see Best of Free Money Finance: Investment Posts.
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