Index Funds

Index funds are a type of investment that aims to match the performance of a particular market index, like the S&P 500 or the Dow Jones. Instead of trying to pick individual stocks, an index fund buys all (or a representative sample) of the stocks in that index. This approach helps you get broad market exposure with relatively low costs.

Think of it like this: if you invest in an index fund that tracks the S&P 500, you’re essentially buying a little piece of the 500 largest companies in the U.S. The goal is to mirror the performance of that index, so if the index goes up, your investment should go up too, and if it goes down, your investment might drop as well.

Index funds are popular because they’re generally less expensive than actively managed funds, which try to beat the market by picking specific stocks. Plus, they’re a good way to diversify your investments without having to research and choose individual stocks yourself. It’s a simple, cost-effective way to invest in the overall market. Because they measure a variety of markets, ranging from real estate to tech to finance, index funds like the SPY for example tend to increase year by year, leaving it to be a safe and stable investment to grow your savings over time.