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Warren Buffet has only a few basic rules. Amongst them is only invest in things you understand. I think as a general rule, its a pretty good one.



Unfortunately, I don't understand much. So, I just invest in S&P500.


By doing so, you'll beat the post-fee, ex ante performance of actively managed mutual funds[0]. You're doing exactly the right thing--investing in broad-based indices rather than trying to beat the market. As your time horizons get shorter, you can move some money to bonds (treasuries, bond ETFs, etc.) to decrease your risk (and reward).

[0] http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356021


much better than investing with a some wall street fund that charges exorbitant fees to lag the market




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