An index fund is a mutual fund or exchange-traded fund (ETF) that aims to match the performance of a market index, like a broad group of US stocks, rather than pick individual winners.
Why many beginners look at them
- Broad diversification in a single fund
- Often lower costs than actively managed funds
- No need to pick individual stocks
Keep in mind
- Index funds still go up and down with the market
- Not all index funds are low cost; check the expense ratio
- Different indexes cover very different things: US stocks, international stocks, bonds
General education only. We don't recommend specific funds. Nickel Gains isn't paid by any broker, fund company or adviser.