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Index Fund
A fund that follows a set list of holdings instead of asking a manager to choose each one.
Example
Aisha puts $100 into one fund that follows 500 companies. She owns tiny pieces of all 500 through that single purchase, and the contents change when the list changes.
How it fits in
An index fund may follow companies, bonds, or another published list. Following a list can reduce manager choice and often lowers costs, but the fund can still fall, track the list imperfectly, or be too narrow for a learner's goal. Read what the index contains, how holdings are weighted, the fee, and how easily the fund can be sold. The word index does not guarantee broad diversification or a gain.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.