The Dow Jones Industrial Average is one of the most famous numbers in investing, and it's a weighted average of the prices of 30 high-profile stocks. You can research these stocks and buy one of them through a stock brokerage. If you'd rather invest in the overall average going up, you can do this by investing in a fund that invests in the companies in the average.
Picking Dow Stocks
The Dow Jones Industrial Average is always made up of 30 blue-chip stocks, meaning stocks of large, established companies that are seen as stable investments. The companies change from time to time, but you can look up the list through Dow Jones, a financial information company, or many other services. It's one of several well-known financial indices that track the price of a select group of stocks. Others you may have heard of include the S&P 500, which tracks 500 blue-chip stocks, and the Nasdaq Composite, known for including technology companies.
Once you have the list of Dow Jones Industrial Average companies, and you decide that one of them appeals to you as an investment, you can work with a brokerage firm to buy stock in that company. You'll generally have to pay the listed price per share for the company, plus a commission fee to your brokerage.
Different brokerage firms charge different fees for buying and selling stock; some online brokerages might even allow you to make some trades for free. If you don't already have a preferred brokerage it can be worth shopping around for the best deal.
Once you buy the stock, the brokerage will keep it in your account until you decide it's time to sell.
Investing in Index Funds
If you're interested in investing in every company in the Dow Jones Industrial Average or another index, there is a solution for you. Many financial companies offer what are called index funds, which invest in the companies that make up a financial index, such as the Dow, Nasdaq or S&P 500. This can be a way to effectively invest in the market as a whole or invest in a particular sector of the economy, such as transportation or solar technology. Since they're not paying experts to pick stocks, and instead relying on an existing index, they often can offer lower fees than mutual funds.
You can invest in some index funds directly from the company that runs them, and others you actually can acquire through an exchange, similar to stock itself. Those are called exchange-traded funds, and they have ticker symbols you can search for online, similar to ordinary stocks. Your preferred brokerage might offer some index funds of its own.
Since there often are multiple funds available that track a particular index, it can be worth shopping around to find one that best meets your needs in terms of fees to buy and sell shares in the fund as well as fees charged to manage your funds over time.
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