This article is from the How to Start an Investment Program tutorial, author unknown.
The use of Index Funds was presented as a "mindless" method to achieve results that beat most equity mutual fund managers. Buying into a mutual fund can also be a good choice, if you buy the right one. Unfortunately, the majority of the mutual funds underperform the S&P average while skimming income off the top to pay their management fees.
Investing in the Dow Dogs is another simple method that can bring excellent results, although it does require a little homework. All are good ways for the novice investor to get started in a long term program.
Obviously, there is no one "right" way to design your investment plan. If there was, everyone would be doing the same thing. You must determine what is right for you.
There is one more method of building, or adding to, your portfolio that I want to present: choosing individual small-cap growth companies yourself from among the world of stocks that are out there and available. Before proceeding, I must inform you, as a caveat, that this method is for the aggressive investor who has the time, discipline, and inclination to do his/her own research. This individual investor must also be willing to accept considerably more risk for a potentially higher reward. With this method, you will not simply be shooting for an average market return. Neither will you let a fund manager pick the stocks for you. Nor will you be buying only large multinational conglomerates that are covered by hundreds of analysts. You will be making your own decisions.
That's not to say, however, that information is not readily available to help you make your investment decisions. It's out there, but you have to know where to look and what questions to ask.