An index fund is a mutual that selects the stocks or bonds in it based on how much each stock or bond is worth. For example, a U.S. Total Stock Market index fund would own all the publicly traded U.S. stocks (thousands) based on how much each company is worth. It owns more of large companies like Apple and Exxon than smaller companies like a regional manufacturer. Index funds are the best way to invest and almost always beat stock pickers.
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