Index Fund
An index fund is a mutual fund or ETF that simply holds every stock (or bond) in a market index, like the S&P 500, instead of trying to beat it. Because there's no expensive stock-picking, fees are tiny — and decades of data show most active managers fail to outperform a low-cost index after costs.
One purchase buys hundreds or thousands of companies for a fraction of a percent a year, and the mechanical consequence is that you always hold the eventual winners — long-run market returns come from a small minority of companies, and owning everything guarantees you own them without having to identify them in advance. There is also an arithmetic constraint behind the strategy that no amount of skill removes: all investors together hold the whole market, so before costs the active half must collectively earn the market return, and after costs they must earn less. That is subtraction, not a claim about intelligence. Check the expense ratio and nothing else about recent performance.
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Investment Calculator
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