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How To Invest In Index Funds: A Step-By-Step Guide For Beginners

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In the quarter century they’ve been around, index funds have made investment easy, efficient, and cost-effective. They are mutual funds or exchange-traded funds (ETFs) that hold investments, typically stocks or bonds, tied to an index—hence the name—such as the Dow Jones Industrial Average (DJIA) or S&P 500. Index funds offer a number of advantages: diversification, low costs, and little-to-no maintenance on the part of the investor.

Here’s what you need to know about how they work and how to start investing with this popular fund choice.

This post originally appeared at TIME.