Total stock market index fund.

In plain English

A total stock market index fund aims to own essentially the entire U.S. stock market, thousands of companies large, mid, and small, weighted by size. It is broader than an S&P 500 fund, which holds only about 500 large companies, though the two behave similarly because big companies dominate both. With one low-cost fund you get maximum diversification across the U.S. market, which is why it is a popular core holding. Its return is simply the market's return minus a tiny fee, and it never tries to beat the market, only to match it.

01Why it matters

A total market fund is one of the simplest ways to own the whole U.S. market cheaply, so understanding it helps you see why a single broad fund can be a complete equity core.

02The math, step by step

You invest 10,000 dollars in a total stock market index fund with a 0.03 percent fee, paying about 3 dollars a year to own a slice of thousands of U.S. companies, from the largest to the smallest.

03What this is NOT

04Receipts

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