Index funds are a great option for investors who prefer to spend very little time managing their savings. Think of them as prebuilt portfolios that can reduce risk by spreading money across a broad range of stocks. But index funds come in many shapes and sizes, so investors still need to do research.

With that in mind, the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) is a compelling option for passive income investors. If it follows past performance, the index fund could turn $400 per month into an $825,100 portfolio over three decades, and that portfolio could then generate $15,700 in annual dividend income while continuing to grow.

Here's what investors should know.

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Source Fool.com