Index funds are a type of investment fund designed to track the performance of a specific market index, such as the S&P 500 or the Dow Jones Industrial Average. They are made up of a diverse range of stocks or bonds that mirror the components of the chosen index. This allows investors to gain exposure to a broad market segment without having to pick individual securities. One of the main advantages of index funds is their low cost. Since they are passively managed, they typically have lower fees compared to actively managed funds. This makes them an attractive option for long-term investors looking to build wealth over time with minimal effort.