Index funds are the way to go. They are a passive instrument, so you cannot (should not) be actively trading them. When you put money in an index fund, you esse

Index funds are the way to go. They are a passive instrument, so you cannot (should not) be actively trading them. When you put money in an index fund, you essentially buy shares of that fund (along with several others). There is a fee attached to every trade, and that fee is consumed by all share holders equally. So most index funds will penalize you for trading those shares actively. The way I look at it, an index fund (like S&P index fund) is merely a layer of abstraction over trading stocks. But instead of putting all your money in one stock, the index fund divies up your money across many different companies and sectors in the same ratio as the target index. This protects you from major fluctuations in the market, so in the long term you essentially grow at the same rate as the index. On the flip side, if one of those companies sees astronomical growth, you won't see the same growth. [All: This is my understanding of index funds, so if I am wrong, please, do correct me] There are several good books in the market if you want to go down this route, including the aforementioned "The Intelligent Investor" [must read] and "A random walk down wall street" Another book that I surprisingly found to be very good was "Mutual funds for dummies" [http://tinyurl.com/5ulpvw http://tinyurl.com/5ulpvw][The other book "Personal finance for dummies" by the same author is a good book too. There is another one [http://tinyurl.com/5wso5z http://tinyurl.com/5wso5z] that is short and sweet to read. Good luck!