The Investor Revolution

IN THE PRE-WORLD WIDE WEB DAYS, if you wanted to invest for your retirement, you'd call your broker and ask what looks good. He would sell you a financial plan and 100 shares of GE or maybe a mutual fund he was pushing. But you paid a stiff price: a couple hundred bucks commission for the stock or a 5% sales charge for the fund. Plus an extra percentage point or two every year to help pay for the fund manager's hefty salary.

Today, the Internet is giving investors access to a wealth of free information and pushing commissions under $10 a trade. Meanwhile, index funds, which put investment decisions on autopilot, are beating active money managers by a mile. Since the bulls began running on Wall Street in 1982, the average equity mutual fund has outperformed funds pegged to the Standard & Poor's 500-stock index by nearly 3 percentage points a year.