What do index funds do for you and how can I start one?

Question

What do index funds do for you and how does it work? Also how can I start it?

Answer 1

I think your question is how do you open an account and invest in an index fund, right?  A simple way would be to go to a mutual fund company and open an account, investing in their S&P 500 index fund.  These funds have slightly different names, but the mutual fund company can help you figure it out when you call their 800 number if you cannot figure it out by looking at their website.

Other options are buying an ETF that invests in the S&P500, which would require that you set up a brokerage account.  There are also other index funds, not just for the S&P 500, that invest in other indexes, such as the total U.S. market or the total world market.  Vanguard specialized in these funds and keeps their fees low, so you might want to start with them.