Index fund investing is a popular way for people to place their money in domestic and international markets. An index fund is a type of mutual fund that is not as aggressively managed as other types of funds. Therefore, investors spend less on operating expenses because their fund does not require constant portfolio management. This allows investors to start building a portfolio that is affordable and sustainable.

Advice and ratings on index funds can come from many sources. When looking for sources that offer advice on index fund trading, make sure they are informative and reliable. You can find advice and ratings on how to trade index funds through:

1. Investment professionals that sell and buy index funds.

2. Resources that provide current and projected market information.

3. Index fund ratings.

Action Steps
The best contacts and resources to help you get it done

Find out about the top-rated index funds

To make an informed decision about investing in index funds, look for resources that provide ratings for a variety of index funds. These ratings are developed by companies and organizations that carefully study the market to project the success of a fund.

I recommend: Morningstar is an investment website that publishes annual index fund ratings for investors. Morningstar has outperformed other rating sources many times. The Street is an online investment resource that ranks the top index funds, and also lists the worst performing and most active funds.

Get ratings and advice on managed index funds from financial publications

Financial publications are a great way to find the best index funds currently on the market. These publications have a host of financial experts that watch the market and have years of experience trying to stay one step ahead of major market trends. Online and print publications often make annual or semi-annual index fund ratings.

I recommend: Financial Times has a tool that lets you compare index funds, analyze different sectors and screen index funds for your portfolio. Value Research is an online publication that offer news and trends in investing, as well as lists of its top-ranked index fund investments.

Explore ratings from index fund listings experts

Experts and fund analysts that work with the market are another source of ratings and advice for investments in index funds. You can find experts that work for private investment companies, or who work as journalists.

I recommend: Summit Investment Partners offers its total social impact, or TSI, ratings, which are particularly important to businesses that want to invest wisely in sustainable corporations. MarketWatch is a site published by the Wall Street Journal. It publishes risk information for mutual index funds, as well as rankings and index profiles. It also has a tool that lets investors compare index funds. The Independent Adviser for Vanguard Investors is a long-time watchdog of Vanguard, the king of index funds.

Index funds are a stable investment with low fees and low maintenance. They are not as fun or risky as other investment vehicles, but stable over time.

At the end of every quarter, the press releases from a lot of equities compare themselves to the S&P 500, that is the Standard & Poor's list of the 500 best stocks. In 1975 John Bogle created index fund investing with a stock index fund made up of proportions similar to the companies in the S&P 500. So when the fund is measured up to the S&P, it didn't win and didn't lose.

There are over 1,000 index funds available, but the main categories are:

1. Index funds which mirror the S&P 500.

2. Index funds that track groups of companies such as the Russell 2000 for small companies or the DJ Wilshire 5000 for the whole stock market.

3. Specific niches of funds, such as emerging markets or industrial stocks.

Action Steps
The best contacts and resources to help you get it done

Pick top-rated index funds

With over 1,000 index fund listings out there, it's hard to pick the right fund. Doing homework is crucial, and you should heed the analyst recommendations. The Vanguard S&P 500 index fund (VFINX) is the oldest stock index fund and a very popular one, but there are so many other flavors of funds that you should pick something you find interesting or something which will help make the portfolio more diversified.

I recommend: Money Magazine keeps a list of its 70 best funds, including its top rated index funds. The Vanguard 500 fund, the first-ever index fund, is among its top picks. Go right to the source as well and take a look at the funds Vanguard lists.

Learn the basics of index fund trading

It is easy to buy index funds. They are traded on the New York Stock Exchange and shares can be purchased through any online or bricks-and-mortar brokerage. You can invest in index funds through either mutual funds or 'exchange-traded funds,' which trade like regular stocks. The returns on both of these are very similar.

I recommend: TD Ameritrade and E*Trade offer free online accounts which can be used to buy and sell all funds. Most communities have a branch where you can visit a broker from a firm such as Wells Fargo.

Research to be on top of your index funds

Once you've decided to buy index funds, the hard part is following them. Knowing when to sell is the hard part about investing. Investment advisers recommend people check their investments each day. Look at an individual sector and figure out if it is good or bad for your fund.

I recommend: While Yahoo, MSN and Google have great financial sections which can be used to check on an individual investment, The Street.com is a good resource for news about the bigger picture. If you purchased a fund through Fidelity, for example, you can check your investments on its website. There are indexes that track every publicly traded stock such as the Wilshire 5000 and the top 100 stocks traded on the Nasdaq exchange, with utility stocks, biotech stocks and more.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Stay diversified. If you want index fund investments, don't pick them all in the financial sector or the bond sector. If you have an index fund investing in emerging markets, make sure you have something more stable. Spread your investments around and have them in multiple sectors so pain in one sector won't tank your whole portfolio.