Index Fund
A fund that simply owns everything in a market index — like the S&P 500 — instead of trying to pick winners. You get instant diversification at a near-zero fee.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Index funds exist because stock picking is a losing game for almost everyone, professionals included. Rather than betting on which companies win, an index fund buys the whole market and guarantees you the market return minus a tiny fee. Decades of data show most active managers fail to beat their index after fees, which is why the boring fund usually wins.
Concrete example
An S&P 500 index fund with a 0.03% expense ratio costs $3 per year on a $10,000 investment and owns a slice of about 500 companies.