Index fund
A fund that holds every stock in an index.
An index fund buys all the companies in a market index, such as the S&P 500, so you own a small slice of each with one purchase.
How it works
Instead of a manager picking stocks, the fund copies the index. When a company enters or leaves the index, the fund follows. That makes index funds cheap to run, and the savings go to you as low fees.
Index funds come as mutual funds or as ETFs. Both do the same job; ETFs trade during the day like a stock.
Why they suit DCA
Buying the whole market removes the risk of one company sinking your plan, and low fees mean more of every monthly buy goes to work. Most long-term DCA investors use one or two broad index funds.