Instructions

Decide which approach to index investing suits you best. There are two ways to invest in stock market indexes—index mutual funds and exchange-traded funds, or ETFs. An ETF allows investors to buy and sell the index in real time during the trading day. Mutual funds are priced at the end of each day. One downside of ETF investing is that a commission is charged each time new shares are purchased. With an index mutual fund, investors can automatically reinvest their dividends and capital gains, or even set up an automatic monthly transfer from a checking or savings account.

Contact the mutual fund company or brokerage firm with which you want to invest. In many cases you will be able to open your account online and fund it instantly with a transfer from your bank account. In other cases you will need to complete a paper application and mail it with your initial investment. Be sure to include all the required information, including your name, Social Security number and mailing address.

References

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