Funds & Investing
BeginnerWhat is an index fund?
An index fund tracks a target index by holding a basket of securities. Its goal is to replicate index performance, not beat it.
Quick Definition
An index fund is a passively managed fund that holds the same securities as a target index (e.g., S&P 500). It aims to match market returns rather than beat them, with low fees.
Use this concept with tools
DCA
Dollar-cost averaging (DCA) calculator — simulate periodic investments with expected annual returns. See long-term growth projections and total contributions. Free DCA calculator.
Fee Drag
Impact of ongoing fees on final value.
ROI + Annualized
Calculate total ROI and annualized return on investment. Compare scenarios, measure performance, and make data-driven investment decisions. Free ROI calculator.
NPV
Calculate Net Present Value (NPV) of future cash flows using your discount rate. Evaluate project viability and compare investment alternatives. Free NPV calculator.
Investor quotes to remember
“If you don't keep learning, others will surpass you.”
“The most dangerous words in investing are 'this time is different'.”
“I only bet when the odds are clearly in my favor.”
“Knowing what you don't know is more important than knowing what you do.”
Related concepts
What is the difference between ETF and mutual fund?
ETFs trade on exchanges throughout the day like stocks. Mutual funds are priced once at market close. Both can track similar indexes, but ETFs generally offer lower costs and intraday flexibility.
What is expense ratio?
Expense ratio is the annual fee a fund charges as a percentage of assets. A 0.1% ratio on $10,000 costs just $10/year. Lower is better — fees compound against you over time.
What is tracking error?
Tracking error is the standard deviation of a fund's return relative to its benchmark. A low tracking error means the fund closely mimics the index — key for passive investors.