What is an index fund and why do most financial educators recommend it?

An index fund passively tracks a market index — the S&P 500 index fund, for example, holds all 500 companies in that index in proportion to their size. Because no fund manager is making active decisions, the fees are extremely low (often 0.03–0.10% per year, called the expense ratio). Decades of data show that the overwhelming majority of actively managed funds fail to outperform their benchmark index over a 10+ year period after fees. By buying a low-cost index fund, you capture the market's return minus a tiny fee — which over 30 years beats most professionals. This is why index investing is the foundation recommended by educators for long-term wealth building.