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Aimeecc's question was how to invest? From The Economist of 1 Mar 2008 entitled "Money for old hope: A special report on asset manaegment":

The privatisation of the Swedish social-security system provides a useful case study. Swedes were encouraged to pick their own funds, with 456 to choose from at the launch in 2000, ... But despite the large choice, most participants put their money into funds with an alluring recent record. The favourite fund at launch, specialising in technology and health care, had risen 534% in the five preceding years. Over the next three years, however, it lost 70% of its value. Oddly, once having made their choice, participants slumped into inertia; fewer than 4% changed their portfolio each year.

Chastened perhaps by their experience, over 90% of Swedes now choose the default option (the one that scheme members are assigned to if they do not want to make their own choice).

This same process occurs when people select mutual funds. Whereas shrewd investors would invest based upon a informed belief in new products and an innovative spirit, Mutual Fund investors tend to invest using assumptions only based in past performance and with little regard to what those investments actually produce. Most mutual funds are a sort of blind trust that somehow the fund will be profitable and mostly driven by past performance. Past performance is not a good measure because of economic pressures that are forcing changes.

The sort of product that most people want is probably something that requires them to pay in a given sum a month for the rest of their working lives in return for a given annual income, or some proportion of their final salary, for the whole of their post-retirement lives. Anyone who could offer them something along those lines would crack the market.

Yet fund-management companies find it very difficult to make that kind of promise. The only investment that can offer a guaranteed inflation-linked return is index-linked government bonds, which offer very low real yields.

What should an investor do once this massive downturn created by financial mismanagement works itself out?

The fund-management industry has done very well - but mainly for itself, says Philip Coggan.

Imagine a business in which other people hand you their money to look after and pay you handsomely for doing so. Even better, your fees go up every year, even if you are hopeless at the job. It sounds perfect.

That business exists. It is called fund management. ... fees in the industry tend to grow at around 15% a year because markets rise by an average of 8% and savings grow by 5-6%. This growth is being maintained despite the industry's vast size. ... the value of all professionally managed assets at the end of 2006 was $64 trillion. ...

The average profit margin of the fund managers that took part in a survey by Boston Consulting Group was a staggering 42%. In part, this is because most fund managers do not compete on price. Instead, they persuade their clients to select their funds on the basis of past performance, even though there is little evidence to show that this is a good predictor of future success. Nor can investors be sure that the intermediaries who sell the funds - brokers, advisers and bankers - will steer them in the right direction. These middlemen often get a cut of the fund managers' fees, so they have little interest in recommending low-cost alternatives.

First we pay fund manager who in turn has us paying middle men. That's many people charging fees; a major percentage of any profit from the initial investment.

Hence the clients get engaged in a costly game of chasing the best performers, even though by definition they are bound, on average, to lose it: after costs, the average manager inevitably underperforms the market. Figures from John Bogle of Vanguard, an American fund-management group, neatly illustrate the point. Over the 25 years from 1980 to 2005, the S&P 500 index returned an average of 12.3% a year. Over the same period, the average equity mutual fund returned 10% and the average mutual-fund investor (thanks to his regrettable tendency to buy the hottest funds at the top of the market) earned just 7.3%, five percentage points below the index.

A well proven point made so often by many but just as often denied by some industry professionals. The average mutual fund underperforms the market.

But whereas the clients have not always done particularly well out of the industry, the providers have prospered. In recent years the growth of private equity and hedge funds has led to more widespread use of performance fees, creating a new class of billionaires. The balance between the industry and its clients will not be redressed until investors learn that higher fees do not guarantee higher returns. ...

Even so, fund management is undergoing a revolution of sorts. "The industry is in the process of more change than I've seen in the 30-plus years that I've been in the business," says Mr Brown. In part, this reflects the lessons of the 2000-02 equity bear market. Pension funds had been heavily exposed to equities in the 1990s, which allowed the sponsoring companies to take contribution holidays. But when share prices fell, pension funds went into the red, raising doubts over whether equities were the right match for the long-term liability of paying out retirement benefits.

Once it was 'smarter' to invest our own social security money? Suddenly GM is proclaiming 'legacy costs' when GM rationalized that they need not contribute; and now owe $7 billion to pension funds. How many others also thought they could better invest their social security money - and then just as foolishly put that money in mutual funds or other 'we are better because we are professionals' investments.

So far, fund managers have been remarkably successful in maintaining their high fees, even in the face of lower investment returns in recent years. For more than three decades they have been fighting the challenge from "passive" rivals, which simply track the market through an index such as the S&P 500 or the FTSE 100. But now there are passive versions of other fund-management styles too, even high-charging hedge funds. Asset managers, for so long the Bloomingdales and Harrods of finance, are facing competition from the sector's Wal-Mart in the form of exchange-traded funds (ETFs), a flexible vehicle that gives investors exposure to almost any asset class at low cost.

If a cross section of the S&P 500 returned a 12.5% return, then why would one settle for 10% in a mutual fund? 2% is a devestating fee when the average investement only returns 8%. Worse if investments do even worse do to 'economic revenge' and a war that must still be paid for. Now we have a whole new economic environment created by economic mismanagement over these past seven years.

Most people cannot invest in all 500 stocks. Now investors can buy a stock (an ETF) that, in turn, invests in all 500 S&P stocks. Invest in everything by eliminating the expensive 'good looking' professional. Get advantages of a mutual fund without the major expense - the professional. Reap higher returns by investing in an index fund. Or invest in ETFs. Some famous ETF stock symbols are SPY & QQQ.