• Market index: A list that tracks part of the market. The S&P 500, for example, tracks about 500 large U.S. companies.
• Expense ratio: The yearly fee a fund charges, as a percentage of your money. A 1% expense ratio costs $10 a year for every $1,000 invested — every year.

1. Funds = instant variety in one purchase.
2. Index funds track a market index instead of picking winners.
3. Expense ratio = yearly fee as a % of your money.
4. A 1% fee can cost tens of thousands over decades.

1. 1. C. Match the performance of a market indexIndex funds track an index, like the S&P 500, instead of trying to beat it — which keeps costs low.
2. 2. B. $400.8% of $5,000 = $40. And it's charged every year, on a (hopefully) growing balance.
3. 3. FalseFees compound. Over 30 years, a 1% fee can reduce an ending balance by roughly a quarter.

1. 1. $5,000 × 0.002 = $10.
2. 2. $50 — five times as much.

Answers will vary. Look for reasoning that uses the lesson's key ideas:

• Funds = instant variety in one purchase.
• Index funds track a market index instead of picking winners.
• Expense ratio = yearly fee as a % of your money.
• A 1% fee can cost tens of thousands over decades.