Glossary

An index fund is a type of mutual fund or exchange-traded fund (ETF) that aims to replicate the performance of a specific market index. 📊

By investing in an index fund, investors gain exposure to a broad range of stocks or bonds with just one investment. This helps to diversify the portfolio and reduce risk, while offering lower management fees compared to actively managed funds.

A well-known example of an index fund is the Vanguard 500 Index Fund (VFIAX), which tracks the performance of the S&P 500 Index. 📈

Fun fact: Index funds were first introduced in the 1970s by John C. Bogle, the founder of Vanguard Group. 🌟 Today, they are a popular investment choice for long-term investors due to their low costs and historically competitive returns.