An index fund holds the same securities as a market index, such as the S&P 500, aiming to match the market's return at very low cost rather than picking winners. Because it requires little active management, fees are minimal, and decades of evidence show low-cost index funds outperform most actively managed funds over the long run.
A single S&P 500 index fund gives you a slice of 500 large U.S. companies in one purchase.
Index funds have outperformed most actively managed funds over every long time horizon. Here is how they work, why they work, and how to use them effectively.
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