THE BEST-KEPT INVESTMENT SECRET ON WALL STREET Published September 22, 1997 Other Columns by Beth Kobliner Web Resources: The Tripod Guide to Mutual Funds: Comprehensive info on all types of mutual funds. Max's Investment World: Reliable source for entry-level investment tips with good, clear writing. Kiplinger's Top Funds: Track the largest and best-performing funds.

There are two kinds of stock mutual funds: actively managed funds, in which you pay someone to pick and choose which stocks to invest in; and passively managed funds, also known as "index" funds. An index is a group of stocks whose performance is felt to reflect the performance of the market as a whole. The Dow Jones Industrial Average is one prominent index; the Standard and Poor's 500 is another, larger one. A stock index fund is a mutual fund that simply invests in the stocks that make up a given index; because no choice is involved, index funds generally have much lower expenses than their actively managed counterparts. And here's the thing: History has shown that index funds have performed just as well as actively managed ones. So why pay more for the same results? To find out more about index funds, call a mutual fund company; some of the ones worth checking out are Vanguard (1-800-662-7447), Charles Schwab (1-800-2NO-LOAD), and T. Rowe Price (1-800-638-5660). Beth Kobliner is the author of "Get a Financial Life: Personal Finance in Your Twenties and Thirties," published by Simon & Schuster in May. In 1994 and 1995, Kobliner was selected by TJFR Business News Reporter as one of the country's most promising financial journalists under the age of 30. Kobliner is currently a contributing writer for MONEY magazine and is a regular commentator on MPR's "Sound Money." She lives in New York City with her husband and their daughter. © 1997 Beth Kobliner, all rights reserved.