Investing 101 — Buying the whole market in a single, low cost package.
Instead of betting on single stocks, an index fund lets you buy a whole market in one package. It holds many companies to track an index like the S&P 500.
Expense ratio: The yearly fee to run a fund, as a percent of your investment. Lower is better, because fees compound against you over time.
Index funds give instant diversification at very low cost, and decades of evidence show most active stock pickers fail to beat the market after fees.
ETF: Exchange traded fund: a fund that trades on an exchange like a stock throughout the day, unlike a mutual fund that prices once after close.
A 0.04 percent expense ratio costs just $4 a year per $10,000. Small fees matter enormously over decades.
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