Glossary
What is Index fund?
An index fund copies a list of companies instead of trying to pick winners.
The simple explanation
It buys the same stocks as an index, in the same proportions. Because nobody is picking stocks, fees are usually low. Index funds can be mutual funds or ETFs.
An example
An S&P 500 index fund holds the same 500 companies as the S&P 500.
Why it matters
They are a popular, low cost way to follow the whole market.
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Educational information, not financial advice.