Investment and Saving Tips

Index Funds? Is it really good? How Much?

Index Funds are very safe and rewarding funds for safe players who don't have much knowledge of stocks/mutual funds or don't have time for that.

But, as these Index Funds are aligned with American Biggies it doesn't show large growth or reward potential. So, if there is any Index Fund investing in Mid-Cap or Small-Cap that would be real good to go. e.g. ING Direct has Index funds in all 3 segments Small Caps, Mid Caps and Large Caps.

This small move can fetch real good rewards with almost the same safety.

Diversifying from Stocks to Real Estate

It's called a Real Estate Investment Trust or REIT.

Vanguard's REIT Index Fund (VGSIX), which has a dirt-cheap expense ratio. With a $3,000 initial investment, your fund only costs a measly 0.21% per year -- a huge advantage over the average expense ratio of 1.55%. On a $3,000 investment, that means you'll pay just $6.30 instead of $46.50. Another bonus: This fund has a total return of more than 288% for the 10 years that ended with May 2006. Or You can cash in on streetTracks Wilshire REIT (RWR), whose gain of 31% for the 12-month period that ended with February makes it a "hot property!".

Dividend Reinvestment Plans (DRPs) and their cousins, Direct Stock Purchase Plans (DSPs)

More than 1,000 major corporations offer these types of stock plans, many of them with fees low enough (or free) to make it worthwhile to invest as little as $20 or $30 at a time. DRIPS are perfect if you only have small amounts to invest and want to make frequent purchases (a strategy known as dollar-cost averaging). Once you're in the plan, you can set up an automatic payment plan, and you don't even have to buy a full share each time you make a contribution.

Save on Broker Cost

At Merrill Lynch "representative-assisted" (that's "broker" in plain English) trades cost $85 per transaction (plus a per-share surcharge) if you're buying 251 to 500 shares. Make just 10 trades in a year and you've given $850 of your hard earned dollars to your broker. But make those same trades using one of the online brokers below and even at the highest commission, you're paying just $199.50.

You can go online brokers like Fidelity, ShareBuilder, TD Ameritrade.

Great Advice of Diversification for New Bies from Tom Gardner

Take $5,000 and open a discount brokerage account, paying something like $10 per transaction -- and spread it across 15 different investments including: funds, larger individual names that pay a dividend and smaller companies that most Wall St. investors aren't watching.

15 names? That's only $333 per investment on average. That's OK because diversification is the key to your long-term success. Tom Gardner (Motley Fool CEO and co-founder) should know. He says "by spreading out your money, you also beat away the speculative instinct." Highly diversified people end up realizing that their stock investments are a lot like a bank account with much, much higher interest rates.

A real small tip for buying any good Stock

With a stock-price way below its 52-week high would surely reward us while tending to reach its 52-week high again. So, any good stock like Apple or Dell or Intel would be a good purchase when they go way below its 52-week high.