What can low-cost index funds provide to investors?

Low-cost index funds are designed to track a specific market index, such as the S&P 500, and provide investors with broad market exposure. This means that when investors put their money into these funds, they are purchasing a small portion of all the stocks that make up the index.

The primary benefit of broad market exposure is that it allows investors to diversify their portfolios without needing to select individual stocks. This diversification reduces the risk associated with investing in single companies, as the performance of the portfolio reflects the overall performance of the market rather than being dependent on any single investment. Additionally, by keeping costs low and avoiding active management strategies, these funds typically have lower fees than actively managed funds, further benefiting investors over the long term.

Investors gain the advantage of participating in the market's growth while minimizing individual investment risk and management costs, aligning perfectly with the principles of passive investing.