India, July 12 -- Index funds are investment funds that copy a market index like the S&P 500 instead of trying to beat it. They collect money from many investors and buy the same stocks that are part of the index they track. Most index funds are passively managed, which means they usually have lower fees than actively managed funds.

One popular example is the Vanguard S&P 500 ETF (VOO), which tracks the S&P 500 and gives investors exposure to 500 large U.S. companies, according to The Motley Fool. Even though index funds are simple and popular, many people still believe myths about them. Here are the biggest ones.

Many people think index funds are totally safe because they simply follow the market. This is false. Index funds avoid the r...