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A simple, low-cost way to invest in stocks or bonds is to invest in what’s known as an index fund. These are passively managed funds that mechanically follow an index, such as one of the following:

 Bloomberg Barclays U.S. Aggregate Bond Index: A broad index that tracks the U.S. bond market.

 Standard & Poor’s (S&P) 500 Index: Tracks 500 large U.S.-headquartered-companies’ stocks.

 MSCI U.S. Broad Market Index: This index follows small, medium, and large U.S.-company stocks.

 MSCI Europe Index, MSCI Pacific Index, MSCI Emerging Market Index: These three indexes respectively track the major stock markets in Europe, the Pacific Rim, and in emerging economies, such as Brazil, China, India, and so on.

 FTSE All-World Index: A global stock market index.

All index funds aren’t created equal. How so? They do have these differences, so make sure you closely investigate any funds before you make an investment:

 Some have higher expenses than others. Lower costs, of course, are generally better when comparing index funds that track the same index (as long as the lower-cost index fund tracks its index well).

 Some indexes are likely to produce better long-term returns than others. For example, we have some concerns about the S&P 500 index because it’s a capitalization-weighted index. With this type of index, stocks hold a weighting in the index based on their total market value.For instance, during the 1990s, the technology sector’s stock weighting in the S&P 500 index ballooned from about 6 percent in 1990 to 29 percent by 1999. So investors buying into an S&P 500 at the end of 1999 had nearly 30 percent of their investment dollars going into pricey technology stocks. The financial sector experienced a similar ballooning in weighting before its steep price drop in the late 2000s.

In addition to traditional index funds, some index funds invest in value-oriented stocks, which are those selling at relatively low valuations compared to the companies’ financial positions. Value-oriented stocks are far less likely to hold hot sector stocks destined to crash back to Earth. You also can use index funds that invest in equal weights in the stocks of a given index.

Exchange-traded funds (ETFs) are index-like funds that trade on a major stock exchange. The best ETFs have even lower costs than index funds. But plenty of ETFs have flaws, such as higher costs or a narrow industry or small-country investment focus.

Here’s a list (in order from bond funds, U.S. stock funds, and then foreign funds) of index funds and ETFs that are our favorites:

 iShares Core U.S. Bond Aggregate (AGG): This ETF invests in investment-grade bonds and follows the Bloomberg Barclays Aggregate Bond Index.

 Vanguard Total Bond Market Index Admiral Shares (VBTLX): An index mutual fund that follows the Bloomberg Barclays Aggregate Bond Index. The ETF version (BND) has a slightly lower expense ratio.

 Vanguard Inflation-Protected Securities (VIPSX): This mutual fund, while technically not an index, largely follows the Bloomberg Barclays U.S. TIPS Index of inflation-protected bonds. Admiral Shares (VIAPX) has a lower expense ratio and a higher minimum ($50,000).

 Vanguard Small Cap Value ETF (VBR): This ETF tracks the value companies of the MSCI U.S. Small Cap 1750 Index.

 iShares Russell 2000 Index (IWM): This ETF tracks the Russell 2000 index of small-company stocks.

 iShares Russell 2000 Value Index (IWN): This ETF follows the Russell 2000 Value index, an index of small-company stocks.

 iShares Russell 1000 Index (IWB): An ETF that invests in the larger-company stocks that comprise the Russell 1000 Index.

 iShares Russell 1000 Value Index (IWD): This ETF follows the Russell 1000 Value Index, a larger-cap value index.

 Vanguard Total Stock Market ETF (VTI): An ETF that invests in small, medium, and large U.S. stocks.

 Vanguard Real Estate ETF (VNQ): This ETF follows the MSCI U.S. REIT Index, which invests in real estate investment trusts. You can also buy this as a fund — Vanguard Real Estate Index Fund Admiral Shares (VGSLX).

 Vanguard FTSE All-World ex-US ETF (VEU): An ETF that invests globally per the FTSE All-World ex-US Index, which includes about 2,200 stocks of companies in 46 countries, from both developed and emerging markets around the world.

 Vanguard Total International Stock Index Admiral Shares (VTIAX): This index mutual fund tracks the FTSE Global All-Cap ex-US Index. The ETF version (VXUS) has a slightly lower expense ratio.

 iShares MSCI EAFE Index (EFA): An ETF that invests to replicate the performance of the MSCI EAFE Index.