My Newest Venture: Index Funds

I'm hoping to start putting a small amount of money -- say, $15-20 a paycheck -- toward a Roth IRA and invest it in an index fund. My current investments have really taught me the art of tolerance; the markets went up and my stock funds went from $1000 to $1400 in just a few months. Then the market went down, and my stocks -- mostly in solar and renewable energies -- also plunged, finally stopping at $605. I was feeling a bit panicky, and wishing I hadn't followed the advice of financial magazines (and really, I shouldn't have -- I was picking my stocks on P/E ratios, but there were a couple "big performers" that the magazines were touting, so I bought them -- and lost big.)

However, when I looked over my purchases, I decided that only one stock was an "unknown." It was stock I had bought for sentimental reasons without really scrutinizing the business practices of the company (it was near my hometown). So, I cut it loose. It was a good thing, because the stock has continued to drop, and I lost relatively little.

My stocks just surged back up to $825, and from this I've learned: thou shalt not check the stocks every day. I trust the companies I've invested in and so long as they don't go under, I know the stocks will eventually perform.

Now I am beginning to research the much-touted index funds. I've discovered the Vanguard 500, and today I saw this article on a new Vanguard Index fund that follows mid- and large-cap companies in the FTSE All-World Index. I'm also trying to follow and understand securities. At some point, I'd like to take a class; I never learned anything about finance either in high school, college, or now, having gone through most of a master's degree. It's kind of an adventure, really, except that I feel pretty stupid a lot. So I'll be posting more about Index Funds as time goes on, as well as continuing to discuss debt paydowns.