Which do you think is easier to understand: an insurance policy or a mutual fund prospectus? Well, most people (82 percent) actually believe an insurance policy is easier to understand than the investment information they get from a broker.

I mention this because I came upon a very informative and entertaining Web site recently that helps sort out the financial jargon that befuddles so many people. It is called Money Smarts from AARP Financial (www.moneysmarts.com).

As the site points out, every profession has its jargon, and educators are as guilty as any other group. You have your slang and acronyms and terminology that those "in the know" understand and toss about among themselves. Those who don't get it are left on the outside looking in.

Well, it's the same in the financial services industry. In the case of mutual funds, financial planners or brokerage houses, however, the attachment to jargon appears to be counterproductive. Many people surveyed say that this jargon blocks or significantly delays them from becoming active investors. Whether that means not taking advantage of a retirement plan at work or feeling stymied from starting a personal investment portfolio to reach their financial goals, the result can be catastrophic.

Even though it is reasonable that the words investment companies use in print have to be legally defensible and say exactly what they mean, terminology leaves potential investors confused (76 percent), intimidated (59 percent), frustrated (71 percent) or turned off (74 percent). Only 38 percent of those surveyed felt empowered by the jargon used by investment advisers and in the written materials they give out. GfK Roper Public Affairs and Media conducted the survey for AARP Financial.

If it's easier to understand IRS tax forms or instructions for a home computer than it is to decipher a mutual fund prospectus, maybe it's time for a plain-English translation of even the most basic terminology. Let's start right here:

What's a prospectus? It's a regulatory document, much of which is proscribed by government regulations, that describes the structure of a mutual fund, including its objectives, fees, expenses, past performance and management.

If you have read my columns over the past 10 years, you know that I believe every person who works for a living, and who expects to retire one day, should be building a portfolio of personal investments to supplement employer-provided retirement plans and to have money for long-term goals like home ownership or children's college expenses.

I write about many common strategies like "pay yourself first" and "dollar cost averaging." I write about "no-load index funds" and caution against high management expenses, but in case you are in doubt as to exactly what these terms mean try this:

Paying yourself first means that every time you get paid, the very first thing you should do is transfer money into a savings account. Whether that is a simple passbook account to begin with, or a higher-yielding money market account, doesn't really matter. What matters is that you put at least 5 percent of your paycheck away and increase that amount every time you get a raise. Your goal should be 10 percent. If you can transfer the money through automatic payroll deduction, that's even better. Ask your employer. If you never see the money, you won't miss it.

After you have accumulated enough cash in your money market account to meet the minimum deposit, you can open a no-load index fund. That's a mutual fund (a professionally managed pool of money invested in stocks, bonds or other securities) that tries to mimic the performance of a commonly reported benchmark, like the Standard & Poor's 500 Index. It does so by buying only the stocks of companies that make up that index.

Contrast that to a fund that is actively managed where the fund managers use research, forecasts, and their own judgment and experience to buy (sell or hold) any stock permitted under the terms of the fund's prospectus. Their goal is to try to beat the performance of an appropriate benchmark index. Sometimes they do, sometimes they don't.

A no-load fund does not charge a commission or sales fee (load) to buy shares of the fund. A fund that charges a load, on the other hand, takes its cut from your investment before any shares are purchased.

For example, if the fund has a 4.5 percent load, only $95.50 of every $100 is actually invested in your account. Some funds also charge fees when shares are redeemed or in what are called 12b-1 fees (ostensibly to cover the costs of marketing the fund). I am a believer that there are plenty of no-load funds out there that perform as well as, or better than, their loaded brethren. So why pay for a service that you don't need?

Every fund, load and no-load, incurs certain management expenses. These are the costs of doing business like commissions for buying and selling shares, keeping a stable of investment experts and support staff, providing information about the fund to shareholders, and so on.

Management fees usually are based on the amount of money the firm handles. Expenses vary widely from a few tenths of 1 percent to 2 percent or more. Like the difference between load and no-load funds, there are many great funds that have very low expense ratios. Vanguard and Fidelity are among the companies that have some very low-cost, no-load index funds. I make it a point to never invest in a fund with management expenses of more than 1 percent.

The next step is to keep adding to your fund(s) as you accumulate more money in your money market account. The most accepted way to do that is through dollar cost averaging. That means investing a set amount of money regularly, be it monthly or quarterly. It takes the emotion out of the decision-making process, and it lets you buy more shares when market prices are down and fewer shares when they are up. I'll explain.

Say you own 200 shares in the Fido Fund at an average price of $10 per share (net asset value = $2,000). At the end of the last quarter, you had $450 in your money market account. Fido was kind of a dog last quarter and shares were selling for $9.62, so you invested that $450 in 46.778 new shares.

This quarter, Fido broke out of the pack and rebounded to $10.03 per share, so the $450 you set aside this quarter through "paying yourself first" will buy 44.865 shares. The total value of your account at the end of this quarter is 291.643 shares at the closing price of $10.03 or $2,925.18. Your $900 investment has already boosted your profit (on paper) by $25.18.

By investing when the markets were down a little, you actually took advantage of the first half of the old axiom "buy low, sell high." Now, be patient. This money will grow significantly before you need it for your long-term goals. Then you can hope to sell at an even higher price.

I wrote a column entitled "Pay attention. Planning matters," which ran in the February 2008 issue of American Teacher. There, I said:

Research has shown that to build wealth, it's not what you invest in, but that you invest, and that you do so regularly whether the markets are up or down at the moment. A core fund, such as a low cost, no-load S&P 500 Index fund from one of the major families of mutual funds makes a solid base from which to start building a portfolio. After you're ready for diversification, branch out to international, bond or perhaps sector funds and ETFs (exchange-traded funds).

As you educate yourself about the way investing can work for you, you may encounter other terms that are difficult to understand. Don't let them block you from becoming an active investor. Go to the Moneysmarts Web site mentioned above and click on the "Jargonator" tab. It will take you to a menu of terms that can be explained with a click of your mouse.

Or try www.investopedia.com where you can type in the word or terms that have you confused and find a definition. A note of caution: This site is overloaded with information (and advertising). Sorting out what you really want may take some effort, but it's worth it-you'll learn plenty along the way. You also can sign up to have the site's "term of the day" sent directly to your computer.

Or have a little fun on your own by doing a Google search for an "investment glossary" and find a site you enjoy that is written on a level you can easily understand.

There is only one way to reach your goals, whether they are retirement or home ownership or something else, and that is to become an investor and to take advantage of the vitality of the U.S. and world markets. It's not always pretty, as the events of early fall showed, but over the long haul the stock market is where large gains can be made.

Just working for a living won't get it done. And Social Security, even coupled with your employer's retirement system, will likely fall short of what you need to enjoy a happy retirement.

Jargon can be confusing and off-putting, but don't let it stymie you from becoming an active investor. It's your money. Bite the bullet. Get started.

Don Kuehn is a retired AFT senior national representative. For specific advice relative to your personal situation, consult competent legal, tax or financial counsel. Comments and questions can be sent to dkuehn60@yahoo.com.