As for your investment, most of the mutual funds require an initial investment, anyway from $1,000 to $3,000. Therefore, if you can come up with the initial investment, then Vanguard has some great index funds for you to choose. An easy target will be the Total stock market fund (VTSMX), owning the fund will give you the exposure to the entire US stock markets. If you don’t have the initial investment, you can choose funds from T. R. Price which waives the initial requirement if you use their automatic investment plan (for as little as $50 a month). If you want to invest in a diversified fund which consists of both US and international equities as well as bonds, then you may want to look at the so called target funds. If you have a long time horizon, you can choose a fund with a target date that’s 40 years away to increase the exposure to stocks.

ETF makes more sense if you invest in lump sum instead of dollar-cost averaging since you will have to pay a commission for each trade, or you use a broker such as Zecco which doesn’t charge fees for trading stocks. The advantages of ETF over mutual fund are that they are generally cheaper to own and doesn’t require initial investment or minimum purchase amount. However, broker commissions usually apply when buying ETFs.

I feel that before you build a diversified portfolio, buying DRIP stocks may not be a good choice as individual stocks are always volatile.

I have been reading your diary for a while and was impressed by your well-performed investment. The only investment I did so far is to put the extra money into the saving account. I did put some money into 401K but not too much. I am thinking of invest $200-$300 a month into some kind of mutual fund or(ETF, DRIP) stock or something else. So, any suggestions?

I hope I did not misunderstand the definition of ETF and DRIP, which both categories under stock, Am I right?
Thank you!