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. ETFs & Mutual Funds

    An Introduction To Stock Market Indexes

    Investopedia explains the five most talked about indexes and what makes them all different.
  2. ETFs & Mutual Funds

    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. ETFs & Mutual Funds

    The Top 3 ETFs to Track the Dow Jones Industrial Average for 2016

    Learn about exchange-traded funds that track the Dow Jones Industrial Average. Read how compounding impacts the results of inverse and leveraged ETFs.
  4. Investing

    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.
  5. ETFs & Mutual Funds

    What is an Index?

    An index is a statistical means of calculating a change in an economy or market.
  6. ETFs & Mutual Funds

    What are Index Funds?

    An index fund is a type of mutual fund that is tied to a broad stock index like the S&P 500 or the Dow Jones Industrial Average, instead of being handpicked and managed by an investment manager. ...
  7. Managing Wealth

    3 Index Funds with the Lowest Expense Ratios

    Read detailed information about index mutual funds with some of the lowest expense ratios in their categories, and learn about their pros and cons.
  8. Managing Wealth

    S&P 500 Vs. Dow Jones ETF: Which is a Safer Investment? (SPY,DIA)

    Learn about why the risks of investing in the ETFs that track the S&P 500 and the Dow Jones Industrial Average are very similar for investors.
  9. ETFs & Mutual Funds

    The Lowdown On Index Funds

    If you can't beat the market, why not join it? Read on to go over your options.
  10. ETFs & Mutual Funds

    ETF Tracking Errors: Protect Your Returns

    Tracking errors tend to be small, but they can still adversely affect your returns. Learn how to protect against them.
Trading Center