How to Invest in the Dow Jones

stock market analysis screenshot image by .shock from Fotolia.com

The Dow Jones Industrial Average, launched in 1896, is the oldest stock index in the world. Since there are only 30 stocks in the Dow Jones, you could purchase shares of each stock in the index. More conveniently, however, you can purchase shares of an Exchange-Traded Fund that tracks or mimics the performance of the Dow Jones.

Open a taxable brokerage account or Individual Retirement Account with a reputable discount brokerage firm if you do not already have one.

Determine how much money you wish to allocate to an investment in an Exchange-Traded Fund that tracks the Dow Jones. Bear in mind that the Dow Jones by itself is an undiversified index consisting of only 30 large company stocks, so you might want to allocate some funds to other types of assets, such as small company or international stocks.

Review information for the Diamond's Trust, ticker symbol DIA, currently the only Exchange-Traded Fund that tracks the Dow Jones. You can review information about DIA by typing the letters into any quoting site, including your brokerage firm's research page.

Follow brokerage firm's rules to place a trade online or with the assistance of a broker. Note that you cannot purchase a specific dollar amount. Instead, you can only get close to the dollar amount you wish to spend by purchasing a specific number of shares minus the trade commission.

Tip

Consider investing in more broad-based index Exchange-Traded Funds such as those that track the S&P 500 Index, the Wilshire 5000 Index or the Vanguard Total Stock Market Index.

Warning

Note that Dow Jones, the company that publishes "The Wall Street Journal," also publishes many other "Dow Jones" indexes for which you can find Exchange-Traded Funds. Only the Diamond's Trust tracks the Dow Jones Industrial Average.

Investing in stocks or stock-based Exchange-Traded Funds is risky and you can lose money.

    Warnings

  • Note that Dow Jones, the company that publishes "The Wall Street Journal," also publishes many other "Dow Jones" indexes for which you can find Exchange-Traded Funds. Only the Diamond's Trust tracks the Dow Jones Industrial Average.
  • Investing in stocks or stock-based Exchange-Traded Funds is risky and you can lose money.

    Tips

  • Consider investing in more broad-based index Exchange-Traded Funds such as those that track the S&P 500 Index, the Wilshire 5000 Index or the Vanguard Total Stock Market Index.

References

About the Author

Julia Thomson began writing professionally in 1996. Her work has appeared in "Stage Directions," "Phoenix New Times" and "The Valley Callboard." Thomson has expertise in investing and personal finance, with three brokers' licenses and certification as a budget counselor. She holds a Master of Music from Indiana University.

Photo Credits

  • stock market analysis screenshot image by .shock from Fotolia.com