Funds
Index Fund
A fund designed to track the performance of a specific market index, such as the S&P 500, typically at low cost.
Example
An S&P 500 index fund simply holds the 500 companies in that index in roughly the same proportions, rather than a manager picking which stocks to own.
Common Misconception
Index funds aren't "safe" or immune from loss — they still fall when the broader market falls, since they're designed to match the market rather than protect against its declines.
Why It Matters
Because index funds don't require active stock-picking research, they typically carry much lower expense ratios than actively managed funds, a major reason they've become the default choice for retirement accounts.