They're certainly not sexy. In fact, they're downright boring. That's the point, though: Index funds are designed to simply mirror the broad market's performance without actually beating it. Yawn.

The thing is, index funds are arguably the average investor's best bet when it comes to building a retirement nest egg. And yes, you can absolutely become a self-made millionaire using these ho-hum holdings. Here's proof, and a clear reason you'd want to use them over individual stocks anyway.

If you're unfamiliar, an index fund is simply a basket of stocks that hold the same equities in the same proportion that make up popular benchmarks like the S 500 (SNPINDEX: ^GSPC) or the Dow Jones Industrial Average (DJINDICES: ^DJI). These baskets are bought and sold as a single unit, rather than forcing you to buy and sell all 500 stocks that make up the S 500 or the 30 names that comprise the Dow. Their real upside, therefore, is the ease with which they offer you instant diversification.

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Source Fool.com