How Index Funds Work
The gist
Index funds are a type of investment that track a market index by holding a collection of stocks or bonds that represent that index.
Explain like I'm 5
Imagine a basket that holds a little bit of every fruit in a fruit market instead of just one kind; index funds are like that basket but with pieces of many companies instead of just one.
Big picture
Index funds make investing simpler and often cheaper because they automatically follow the market's overall performance, helping people grow their money without picking individual stocks.