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An index is a collection of securities or other assets that are meant to represent the performance of an economic sector or portion of the market. Indices can be broad or narrow in focus. The S&P 500 represents the U.S. equities market. This index contains stocks of 500 large companies with common shares listed on the New York Stock Exchange or the NASDAQ Stock Market.

While people cannot usually invest directly in the indices themselves, they can invest in index funds which aim to follow or mimic the performance of a specific index where the value of an index fund will typically go up or down as the index itself fluctuates.

Learn more about how indices and index funds work  on GetSmarterAboutMoney.ca. Speak to a registered financial representative for advice that fits your personal and financial situation.