Dan Malone

So the S&P 500 is just one index that just measures the performance of North American stocks, the 500 biggest companies in the U.S.,

And it's kind of, it covers 85% of the total value of the US stock market.

So it's kind of seen as like a proxy of like how the US stock market is performing.

So you can't invest in an index, but you can invest in what's called an index fund.

There are two types of funds, really, actively managed funds and passively managed funds.

The active ones are the ones I was talking about earlier where you have a team of investment professionals and they're trying to guess, you know, what stocks are going to be the big winners so that they can provide these great returns to investors.

Doesn't work over the long term.

Or you have passive funds who say, actually, the investments that we pick for our fund are going to be dictated by the index.

So we're going to copy our investments or match our investments to what the index is doing, right?

So an S&P 500 index fund will invest in those top 500 companies.

And then us as investors, we can go and we can buy shares in the fund.

So an exchange traded fund then just means that shares in that fund are traded on a stock exchange.

And we use investing platforms again to access stock exchanges and buy shares in those funds.

So that's kind of the beauty of that product.

The reason why exchange traded funds are a great product

is number one, first and foremost, they are low cost.

They have very low operational costs, which is described as a total expense ratio or TER.

And the reason why the operational costs of the fund matter, because the expenses of the fund are going to impact the value of your returns.

So the actual expense ratios on these funds, they're expressed as a percentage.

I know for a fact at the moment, the lowest S&P 500 ETFs that we have access to as Irish investors, the total expense ratio is 0.03%.