Plain-English definitions, reviewed by an independent investor
Index Fund
An index fund aims to match a market index’s return rather than beat it, by holding the same stocks in the same weights.
An index fund aims to match a market index’s return rather than beat it, by holding the same stocks in the same weights.
(No formula — replicates an index like the S&P 500)
Why it matters
It is the low-cost, low-ego way most long-term investors build wealth.
Common confusion
It will never beat the market, but most active managers fail to either, after fees.
Frequently Asked Questions
Index fund vs ETF?
Many index funds are ETFs; the line blurs, but index funds describe the strategy, ETF the wrapper.
Why not pick stocks?
Picking winners consistently is hard; indexing captures the whole market’s growth.