Index Fund
A fund that holds every security in a market index, offering broad diversification at very low cost.
An index fund buys all (or a representative sample) of the securities in a market index, such as a total-stock-market or S&P 500 index, rather than trying to pick winners. Because it simply tracks the index, it charges very low fees and delivers the market's return minus those small costs.
Decades of evidence show that low-cost index funds outperform most actively managed funds over time, largely because of lower fees and the difficulty of consistently beating the market. They're the foundation of the Boglehead philosophy and of most FIRE portfolios, prized for simplicity, diversification, and cost.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.