An index fund is a low-cost investment that aims to match the performance of a market index, such as the S&P 500, rather than beat it.
An index fund is a type of fund designed to track the performance of a specific market index, such as the S&P 500, by holding the same securities in the same proportions.
Rather than trying to beat the market through active stock-picking, index funds simply aim to match it. This passive approach keeps costs and fees very low.
Decades of evidence show that most active managers fail to beat their benchmark index over the long run, which is a big reason index funds have become so popular for long-term investing.
Index funds offer broad diversification, low costs, and simplicity, making them a favourite for retirement and buy-and-hold strategies. They are available as both traditional mutual funds and ETFs.
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