How do index funds work?

Index funds are a popular form of investment. They are a type of funds that track a specific market index, such as the S&P 500 or FTSE 100. However, this is a simplified definition that doesn't say much to investment beginners. Understanding a few key points can help make informed investment decisions and reduce the risk of losses. How do index funds work? What do you need to know about them? How to start investing? What is the biggest risk? Does anyone here invest in them?
Index funds are a popular form of investment. They are a type of funds that track a specific market index, such as the S&P 500 or FTSE 100. However, this is a simplified definition that doesn't say much to investment beginners. Understanding a few key points can help make informed investment decisions and reduce the risk of losses. How do index funds work? What do you need to know about them? How to start investing? What is the biggest risk? Does anyone here invest in them?
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