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I have a small networking setup around a Netgear WNR3500L (using TomatoUSB). I use the router for VPN, wireless, media server and Samba shares. I have a desktop, a laptop and few handhelds.

Will it help if there is a Squid Proxy (Do I need one ?)? My ISP bandwidth is 1024kbps up and down.

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Almost certainly not - Proxy's are only really useful for enterprises who want to authenticate/block/monitor internet connections. The caching effects of proxies are nowadays really minimal - most ISPs who once transparently proxied content for caching are removing them.

The most effective caching for speeding up your web browsing will be done automatically by your web browser.

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