Personal finance: When you invest in tomorrow, it's easy to become history...

Nasdaq may be the place to spot the next Microsoft, but it's wise to exercise some old-fashioned caution.

According to Maurice Saatchi, the guru of advertising, good adverts are like road signs. Road signs name a place, say how far away it is and point people in a specified direction. Likewise, good adverts, he points out, supply minimal information and people follow them.

By this definition, the recent adverts for Nasdaq, the new US stock market, may be good: they certainly supply a name and minimal information. They present Nasdaq as a hi-tech grow-bag for investors' money, using examples of companies such as Microsoft.

However, as with any presentation supplying minimal information, they leave many questions unanswered, and many viewers mystified.

What is Nasdaq? How do you invest in it? Is doing so a good idea? Answers to these questions may not make for exciting ad breaks during Who Wants to be a Millionaire?, but if you are attracted by Nasdaq's adverts and want solid investment performance, you should look for answers to these questions, rather than the ones read out by Chris Tarrant.

Named after America's NASDS - the National Association of Securities Dealers, which founded it in 1971 - Nasdaq is one of the most important stock exchanges in the world. It lists shares in over 5,500 companies - more than any other stock market.

"It's a stock exchange that's got a huge mixture of companies in it, ranging from mega technology stocks such as Intel, Microsoft and Cisco, to very small American companies," says Richard Royds, who is the managing director of Mercury unit trusts.

It also has some interesting characteristics. The Nasdaq market is not even in place. Trading takes place electronically between dealers all over the world, although it is facilitated by a mainframe computer in Connecticut.

Yet what really makes Nasdaq stand out are its technology companies - including those mentioned above - among which have been some of the most profitable businesses in the history of the world.

Mr Royds says: "It is not totally technological in any way, but it's got a tremendously high weighting of tech stocks." With the boom in technology it is easy to see why city investment specialists can get excited by Nasdaq.

However, not all of its companies are such glittering success stories. Greg Kerr, a fund manager on the US desk at M and G, says: "Certainly, at the low end of the market, you will get a lot of low-quality companies." While the financial rewards from investing in Nasdaq can be very high, so can the losses.

Still, with the prospect of dynamic hi-tech companies that may boom into global corporate giants, you may want a slice of the action, even if it only forms one part of your investment portfolio.

It is possible to invest directly in Nasdaq by buying shares in its companies via a stockbroker. However, for the vast majority of private investors this is a bad idea.

"If you are going to invest directly in overseas equities, you have got to bear in mind that dealing charges tend to be higher because of increased costs," says Richard Hunter, who is the head of dealing services at Nat West Stockbrokers.

He says that investors will need a minimum of pounds 100,000 before they can even start thinking about purchasing shares directly in foreign stockmarkets.

There is also the problem of knowing which companies to invest in. "There have been some fairly spectacular Nasdaq share price rises, and those are the ones that have been focused on by the advertisements, but there's no guarantee whatsoever that you're going to pick the next Microsoft," he adds.

And many stockbrokers, such as Redmayne Bentley, limit themselves to an execution-only service for clients investing overseas - the company will not usually offer advice to clients on foreign shares.

Amanda Davidson, of the financial advisers Holden Meehan, says: "Private investors should not be encouraged to do this. They should look for a US fund - either a unit trust or an investment trust - and do it that way."

The pooled investments reduce risk by spreading investors' money across many companies, and can benefit from the expertise of a fund manager picking shares. However, although experts agree that private investors should, except in special circumstances, choose a collective investment, there is debate about the best type of fund.

There is no tracker fund, one that passively tracks an index of shares, in the UK for Nasdaq, which leaves investors with a choice between a technology fund and an American fund. Neither will invest solely in Nasdaq, yet both are almost certain to include Nasdaq shares in their portfolios.

A technology fund will invest specifically in the kind of hi-tech companies that have come to characterise Nasdaq. So if it is technology that attracts you, these funds may appeal. A more general American fund will invest in the US as a whole, but by doing so it is very likely to include Nasdaq shares.

The debate focuses on whether American funds or technology funds are likely to offer the best performance. Ms Davidson says: "As far as our clients are concerned, unless they've got piles of money we would generally recommend a spread US fund - not one specifically in hi-tech unless that's what really takes their interest specifically.

"A technology fund is going to be the higher risk. Hopefully that's going to pay off, but that is not always the case."

Mr Kerr warns: "Technology has had a spectacularly strong quarter, but that situation may not be going to last that long."

Yet although the risks may be higher, some experts are still enthusiastic about technology stocks. Mr Royds remarks: "I think that in the technology marketplace, with the speed of change in technology, the opportunities for clever investors are tremendous."

Whatever type of funds you are interested in, it is worth bearing in mind general guidelines for choosing collective investments.

Ms Davidson says: "Have a look and see what its past performance was like; see if the firm it is run by is generally doing well; bear in mind that, if a company only has one good fund, then if its manager leaves that will leave you exposed.

"And you can look at what a fund actually invests in if you want to go into that amount of detail." She advises any investor to consult an independent financial adviser if they have the money to start looking to invest abroad.

Nasdaq is not simply a thoroughbred stud farm for the Microsofts and Intels of the future. Tomorrow's front-runners may be in there somewhere, but finding them is a difficult task that is best left to the professionals.

And "you shouldn't try and gain exposure to Nasdaq for its own sake," warns Greg Kerr. There may be great opportunities waiting to be exploited - but, like Chris Tarrant's television quiz, Nasdaq is not a guaranteed fast track to becoming a millionaire.