like you're 5
everyone chips in for one giant pizza with every topping. you own a slice of the whole pizza, not one sad topping.
use it in a sentence
“my 401(k) is just three mutual funds and i haven’t touched it in two years.”
good to know
the thing that matters most is the expense ratio — the annual fee, taken automatically. under 0.20% is normal for an index fund; over 1% is expensive and compounds against you for decades. mutual funds trade once a day after the market closes, which is a feature, not a flaw.