Index fund
A fund that holds the components of a published index in the same proportions, changing only when the index does.
Where it is explained in full
The health savings account: three tax breaks and one gate. The account people describe with the most excitement and understand the least. It does something no other account does, and there is a gate in front of it that many people cannot walk through.
Workplace plans: the 401(k), the 403(b), and the TSP, from the first paycheck to the last. Everything a person needs to open one, fill it, hold the right things in it, avoid the traps, and carry it with them when they leave. Long on purpose, so that one page is enough.
Funds: what you actually own when you buy one. Both kinds are baskets. The differences are in how you buy them, how they are priced, how they handle taxes, and what it costs to hold them for decades.
What a one percent fee costs over a working life. The fee is small. The share of your ending balance it takes is not. The arithmetic is short and worth seeing once, because after that you cannot unsee it.
A definition says what a thing is; it never says whether it fits you. The guides explain how it works and name the professional who confirms it for a particular person. The No Advice Disclosure.
Words beside it
- bond fund
A pool of money collected from many investors that a fund company uses to buy a large number of different bonds at once. You own a small slice of that whole pool instead of one single bond.
- Consumer Price Index
A number the government publishes that tracks how much everyday things like food and gas cost over time. When that number goes up it means your money buys a little less than it used to.
- direct indexing
A way to own stocks by purchasing the individual companies in an index yourself rather than buying a single fund that holds all of them.
- Emergency fund
Cash set aside for the unexpected, usually three to six months of expenses.
- fund
A pool where many investors put money together so a manager can buy a large collection of investments on everyone's behalf. You own a small slice of the whole pool rather than any single investment directly.
- Index
A published list of investments, like the 500 largest US companies, used as a benchmark and copied by index funds.
- indexed annuity
An indexed annuity is an annuity whose growth is tied to a market index like the S and P 500, but with limits on how much you can gain or lose. It sits between a fixed annuity and a variable one.
- market index
A group of stocks or securities chosen to represent a particular market or sector, used to track how that market is performing.
Ask about Index fund
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