What's a stock index fund?
- What is a mutual fund?
- Who runs a mutual fund?
- What are the advantages of mutual funds?
- What types of mutual funds are there?
- What kinds of funds are best for retirement?
- What kinds of stock funds should I consider?
- What's a stock index fund?
- What makes an index fund so great?
- What's a bond fund?
- Bonds vs. bond funds: Which is better?
- What's a money-market fund?
- Is there a single no-brainer investment?
- How much do mutual funds cost?
- With fund expenses, how high is too high?
- Which is better, a load fund or a no-load fund?
- How can I tell if a fund is a good performer?
- When should I sell a fund?
Glad you asked, because it can be a terrific part of a retirement portfolio. But first you need to know what a stock index is.
Thousands upon thousands of individual stocks are traded in the United States and around the world. A number of so-called indexes have been set up to track how a particular part of the stock market - or the stock market as a whole - is doing. There are indexes that track large-cap companies, small-cap companies, the entire stock market and so on. One of the most common indexes is the Standard & Poor's 500, known as the S&P 500, which represents a broad cross section of 500 large American companies.
What an index fund does is simple: It invests in the entire index. For example, an S&P 500 index fund buys all the stocks in the S&P 500 index. And that's it.
Just about every major mutual fund family offers index funds.
