1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion


We hope this tutorial has given you insight into how you can track the market, use it as a benchmark and make investments.

Some points to remember:

  • An index is a statistical measure of the changes in a portfolio of stocks representing the overall market.
  • The first index was created by Charles Dow in May 1896. It has evolved into what we know today as the Dow Jones Industrial Average (DJIA).
  • The DJIA uses price-based weighting, but most of the other indexes use market capitalization based weighting.
  • The DJIA contains 30 of the largest companies in the U.S. It is what most people are referring to when they talk about "the market."
  • The S&P 500 includes 500 of the largest U.S. companies. More and more, it is seen as the benchmark of the U.S. stock market.
  • The Nasdaq Composite Index represents all the companies on the Nasdaq. It is heavy with tech companies and is more volatile than other market indexes.
  • The Wilshire 5000 Total Market Index contains more than 6,500 stocks and is the largest index in the U.S.
  • The Russell 2000 measures the performance of small caps that often get left out of the other big indexes.
  • There are literally thousands of other indexes, tracking various regions and industries.
  • Most mutual funds don't beat the market.
  • Index funds have lower expense ratios than other mutual funds and allow investors to get the market return.

Related Articles
  1. Insights

    An Introduction to Stock Market Indices

    Investopedia explains the five most talked about indices and what makes them all different.
  2. Investing

    The Pros and Cons of Indexes

    Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.
  3. Investing

    How Stock Market Indexes Changed Investing

    Find out how the first market averages were calculated and what they mean for investors today.
  4. Investing

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  5. Investing

    How Now, Dow? What Moves The DJIA?

    Find out how this index tracks market movements and where it falls short.
  6. Investing

    DIA vs. IWL: Comparing ETFs with the Largest U.S. Companies

    Find out how the SPDR Dow Jones Industrial Average ETF compares with the iShares Russell Top 200 as mega-cap exchange-traded funds.
  7. Insights

    What's a Market Index?

    A market index combines several stocks to create one aggregate value that’s used to measure a market’s or sector’s performance.
  8. Investing

    Benchmark Your Returns With Indexes

    If your portfolio is always falling short, you may not be making an apples-to-apples comparison.
Frequently Asked Questions
  1. Where else can I save for retirement after I max out my Roth IRA?

    The first option to explore is to determine if you can contribute to a 401(k), 403(b), or 457 plan at work. If your employer ...
  2. How did George Soros "break the Bank of England"?

    In Britain, Black Wednesday (September 16, 1992) is known as the day that speculators broke the pound. They didn't actually ...
  3. What counts as "debts" and "income" when calculating my debt-to-income (DTI) ratio?

    It's important to know your debt-to-income ratio because it's the figure lenders use to measure your ability to repay the ...
  4. Who are Monsanto's main competitors?

    Learn about Monsanto Company's two main operating divisions and its main competitors within each sector, including The Mosaic ...
Trading Center