Can index funds make you a millionaire? The answer is yes, but there are caveats. With time and financial discipline, you can amass a seven-figure retirement account by way of index fund investing. Let’s cover everything you need to know below.

Understanding Index Funds

Index funds are pooled investment portfolios that replicate a financial market index. Because the index defines which assets are in the fund—rather than a team of researchers and fund managers—index funds are cost-efficient to operate. This benefits fund shareholders by way of a low expense ratio.

When the expense ratio is lower, more of the underlying investment returns flow through to shareholders. Many Fidelity index funds, Vanguard…