What is an index fund and is it right for me?

An index fund passively tracks a market index (like the S&P 500) by holding all or most of the index's securities in the same proportions. It offers broad diversification, very low fees (often under 0.05% annually), and historical outperformance versus most actively managed funds over the long term. For most people who do not have the time or expertise to pick stocks, a low-cost index fund is the ideal investment vehicle.