OK, so you've started making some decent money at your job and have a bit left over each month. You'd like to start investing in the stock market but have no interest in spending much time monitoring your investments. You aren't interested in becoming a Master of the Universe, following CNBC and the Wall Street Journal for the latest hot stock tip. You have no idea what a Market Maker is and have no intention of finding out. You just want to start putting some money away and have it grow faster than in a savings account.

If this describes your particular situation, investing in Exchange Traded Funds (ETFs) may be a good alternative to standard mutual funds. Even if you want to take a more active role, ETFs provide a way to diversify the portion of your portfolio that you would like to protect from the more volatile swings of direct investment in common stocks, They also provide a way to make a bet on a sector without having to determine which particular stocks in the sector will perform best.

An ETF is an investment product that trades like a stock, but is designed to follow a particular basket of stocks or index. Perhaps the first ETF was the S&P Deposit Receipts, SPDRs (pronounced "Spiders") that were introduced by the American Stock Exchange about a decade ago. This ETF was designed to track the popular S&P 500 Index, which is a basket of 500 of the largest stocks and is used as a popular gauge of the health of the market in general. Since then the American Stock Exchange has gone on to introduce ETFs for the mid-sized stocks (MidCap SPDRs) and small stocks (SmallCap SPDRs). Once the value of ETFs was seen, various companies began to release their own ETFs tracking various indices and sectors of the economy, such that there are now hundreds of different ETFs to choose from.

The advantage of ETFs over traditional mutual funds are two-fold:

1. ETFs trade like a stock, so they can be easily bought and sold and their price is determined by the market. When bought or sold a standard brokerage commission is paid.

2. They have very low costs. This is because they are composed in such a way so as to mimic a particular index or segment of the economy. Because the stocks in the index or section of the economy are defined and do not change often, there are no active managers to pay and there are very few trades being made, resulting in low transaction costs.

To use ETFs to invest without spending very much time, here are the steps:

1. Purchase ETFs representing the three sizes of stocks. For example, select the SPDRs that invest in large caps, Mid-Caps, and Small-Caps. (Alternatives could be selected, for example, investing in the "Diamonds" that mimic the Dow Jones Industrial Average instead of the S&P 500 Spiders, but it really doesn't matter much.) The purpose here is to invest in the three different segments of the market since it is difficult to predict which segment will be doing well at any given time. Like biorhythms, in general at least one segment will be up even if the others are flagging.

2. Purchase equal dollar amounts of each ETF. Equal amounts are purchased because, once again, we don't know which segment of the market will be doing well at any given time and won't try to guess.

3. Continue to save and each time you have enough to purchase 100 shares of one of the ETFs, purchase more shares of one of them. Try to keep the dollar amounts in each ETF about equal as you go, so purchase the one that has the lowest value when you are ready to invest. This also has the effect of buying low.

4. Once a year, check on the value of your investments. If one of the ETFs is worth more than 30% more than the others, sell a few shares and invest in the others. This has the effect of selling high, because if one ETF has greatly outperformed the others, it will make up a larger portion of the portfolio. Selling part of the position in that ETF and buying more of the others locks in some of the profit and buys the others while they are relatively inexpensive.

5. As you near retirement (age 50-55), start to move some of your funds out of the ETFs and into bond funds, REITs, and other more stable investments. By the time you are ready to retire no more than about 50% of your holdings should be in ETFs.

That's all there is to it. By spending just a few minutes a month, and saving and investing regularly, a great portfolio can be built.