Index fund

A fund that aims to move exactly like an index

In detail

An index fund aims to match the movement of an index such as the S&P 500. It simply holds what the index holds, and because nobody has to pick stocks the fee stays low. It never tries to beat the index, so when the index falls it falls with it. It is the usual choice for regular monthly investing.

Example

At a fee of 0.1% a year, holding $1 million for a year costs $1,000.

Related terms

ETF Active fund Stock index

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For learning, not investment advice. Decisions are your own.