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 aportfolio 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 containsmore than6,500 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.