Index Funds Explained in 60 Seconds #shorts
2Money Matters in 60 Seconds: What are index funds? Index funds are a type of mutual fund or exchange-traded fund (ETF) designed to track the performance of a specific market index, like the S&P 500 or Nasdaq Composite. By investing in a representative sample or all of the securities in the index, index funds aim to replicate its returns. These funds are passively managed, meaning they require minimal intervention from fund managers, resulting in lower management fees and expenses compared to actively managed funds. Index funds offer diversification, as they expose investors to a broad range of stocks or bonds, reducing individual security risk. They are considered a cost-effective and straightforward investment option, suitable for long-term investors who seek market-matching returns with lower risk and fees. Subscribe for more finance tips!