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Index Investing: Conclusion

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

Some points to remember:

  • An index is a statistical measure of the varieties in a portfolio of stocks representing the overall market.
  • The first index was produced by Charles Dow in May 1896. It has evolved into what we know today as the Dow Jones Industrial Mediocre (DJIA).
  • The DJIA uses price-based weighting, but most of the other directories use market capitalization based weighting.
  • The DJIA contains 30 of the beamiest companies in the U.S. It is what most people are referring to when they talk around “the market.”
  • The S&P 500 includes 500 of the largest U.S. companies. More and innumerable, it is seen as the benchmark of the U.S. stock market.
  • The Nasdaq Composite Index notes all the companies on the Nasdaq. It is heavy with tech companies and is more explosive than other market indexes.
  • The Wilshire 5000 Total Exchange Index contains more than 6,500 stocks and is the largest sign in the U.S.
  • The Russell 2000 measures the performance of small caps that time after time get left out of the other big indexes.
  • There are literally thousands of other guides, tracking various regions and industries.
  • Most mutual funds don’t tread the market.
  • Index funds have lower expense ratios than other requited funds and allow investors to get the market return.

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