It can also be argued that when you invest in an actively managed mutual fund, you are paying a professional to research and pick winning stocks. You are not paying them 2 or 3 percent a year to park your holdings in cash. If that were case, you would be better off putting your money in your savings account. It really depends on market conditions and fund's investment philosophy and how it matches with your investment goals.

Another common thought is why shoot for an average return when you can try and beat market. Well, it is very difficult even for seasoned money managers to consistently beat index year over year.

Taxes are another aspect of investing that needs to be considered carefully. Every time an active fund manager sells a profitable stock, a taxable capital gain is triggered. Anytime some of an investment is taxed away, magic of compounding is compromised. Index funds on other hand are considered tax efficient investments because very few stocks are bought and sold and therefore few capital gains are distributed to investors. You choose when to sell your investments and therefore have a bit more control over tax consequences. Index investing was once only available to institutional investors who take tax deferral seriously.

Indexing is a strategy that can be applied in many different ways. It is an efficient and low cost way to investment across various markets and asset classes. You can build a core holding of index funds and add a well managed mutual fund that enhances your portfolio's return.

What appeals to me about indexing is that I can have a broad basket of stocks that moves lockstep with market so at very least I am guaranteed a market return. In addition, I can purchase individual stocks or other mutual funds that will add value and enhance my overall rate of return.

Do index funds fit in your portfolio? This is something you need to determine based on your investment goals and philosophy. Over long term index funds should provide competitive returns relative to actively managed mutual funds while keeping your costs down.

5. VISANet routes transaction to your card issuer which then checks that your account is in good standing and that you have available credit to make purchase.

6. Finally, issuer's decision-- approved or declined appears on merchant's terminal.

At end of business day, merchant submits their VISA sales to their bank. Within 48 hours, merchant's bank will issue a reimbursement and merchant's bank submits its transaction records to VISANet for settlement, and is subsequently reimbursed within 24 hours.

Every month, dreaded card statement is sent out to you detailing all of your transactions. At this point, only people out any money is your bank and VISANet. It's now up to you to pay up or get dinged by those outrageous finance charges.

That's it in a nutshell. It happens so quickly and is something that we take for granted each and every time we make a purchase!