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Glossary entry · What you own
Index fund
Definition
A fund (often an ETF) whose only job is to replicate the performance of an index, holding roughly the same things in the same proportions. Because there's no manager picking stocks, fees are very low — and historically they have beaten most actively managed funds.
Example
A Vanguard S&P 500 index fund holds all 500 companies in the index, with fees around 0.03% per year.
Related
What you own
Stock
A share of ownership in a company. You profit if the company grows; you lose if it falters.
Read →Bond
A loan you make to a government or company. They pay you interest, then return your money.
Read →ETF
A basket of many investments — often hundreds — bought in a single transaction.
Read →Index
A representative basket of a market — like the S&P 500 or the IBEX 35.
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