Originally Answered: The best way to build your vocabulary?
Reading is only one piece of the puzzle for vocabulary development. Writing and speaking are also critical pieces.
While looking through the dictionary or thesaurus to find interesting new words can be entertaining, or at least informative, it is much more effective if you are looking for words that will help you express something you actually CARE about expressing.
You should take care to find some outlets for writing that you find engaging and that make you feel productive and useful -- or perhaps creative and entertained. You should involve yourself in frequent writing, but you don't want it to feel like a painful punishment. Answering questions on Yahoo! Answers is a good example of a useful way to apply writing, but there are thousands of other choices.
If, for example, you DO choose to write for a purpose like answering questions on this site, this can help you develop your vocabulary -- IF you really take care in your writing. Most answerers here spit out the first idea that comes to mind and then move on to another question. After you post an answer, REVIEW what you wrote and look for ways to be clearer and more detailed. Don't do this just to be hard on yourself. Do it to offer the BEST HELP that you can. That will help your motivation.
Also, when you DO write, be sure to notice when you are using the same pieces of vocabulary repetitively or communicating with an overly simplistic vocabulary. Take that opportunity to look for synonyms and other expressions to communicate the same ideas more effectively, vividly, and/or imaginatively.
Something else you should pay attention to is who you spend most of your conversational time with. Do you spend much time talking with people whose vocabulary is more advanced than yours? Or do you spend most of your time conversing with people who use a lot of fillers, like "uh" and "um" and "like," and also a lot of swear words that take the place of anything more descriptive? Friends like that may be great friends, but if that's what your friends are like, you need to find time to converse with more articulate people, as well.
Volunteering presents one great opportunity to get into situations where you converse with more adult speakers more often. The multitude of chatrooms available on today's internet present another great option. Use your imagination to find just the right niche.
Do keep reading those books, as well as newspapers, magazines, and anything else you can find that interests you and uses the level of vocabulary you want to make your own. (Even some comic books and many graphic novels qualify, believe it or not!)
Just take care that much of what you read is actually written at a level that challenges your vocabulary somewhat. You should encounter unfamiliar words here and there in a book that is written at your level, but not so many unfamiliar words that it makes it hard to get into the flow of the story. (The same is true of conversing with people as a way to improve your vocabulary -- you need to be challenged to grow, but you do NOT need to be overwhelmed, confused, and humiliated.)
There's nothing like an author's perfect turn of a phrase to capture your imagination and keep you alive to the potential power and beauty of more articulate and apt forms of expression. And books are one marvelously meaningful context for encountering new words in ways that brings them alive, rather than making it a chore to search them out. Frequently, the context surrounding a new word will be sufficient to teach you the word's meaning, but keep a dictionary or computer handy, too.
Finally, there definitely is SOME merit in doing exercises specifically to strengthen your vocabulary, like the suggestion you received about using index cards. The key is to do something with those words besides just "memorizing" them during the exercise. If you do not use those words in mature conversations or in expressing yourself through writing, they will be soon forgotten.
I hope this discussion has been helpful. Good luck!