What is the Dow Jones? Start investing in the Dow Jones
Do you want to invest in the Dow Jones index (DIJ30)? Discover the best methods for investing in the Dow Jones and learn in detail what the Dow Jones index is and how it was created.
What is the Dow Jones index?
The Dow Jones index is not only one of the most well-known stock indexes in the world, but it is also the oldest index in the world. The index is based in the United States and is also referred to as the Dow Jones Industrial Average Index. The abbreviation for the Dow Jones index is DJAI, although this abbreviation is not commonly used. Most people simply refer to the index as the Dow Jones.
The Dow Jones index moves with the US economy, and sometimes even leads the US economy. However, this index is not the best reflection of the US economy. This is because only 30 companies are listed on the index. This number is too small to make the index a reliable representation of the entire US economy.
How to invest in the Dow Jones?
Invest in the Dow Jones with an index
You can directly invest in the Dow Jones through an ETF. An ETF tries to track the price development of an index as closely as possible. By using an ETF, you do not have to buy the 30 shares listed in this index yourself. You can, for example, track the Dow Jones with the Lyxor Dow Jones Industrial Average.
A big advantage of directly following an index is the lower transaction costs. In the table below, you can see which brokers you can use to invest in the Dow Jones with an ETF:
| Brokers | Benefits | Register |
|---|---|---|
 | Buy without commissions. Your capital is at risk. Other fees may apply. | |
 | Speculate with CFD's on increasing & decreasing prices of ! 82% of retail CFD accounts lose money. | |
 | Benefit from low fees, an innovative platform & high security! | |
 | Speculate on price increases and decreases of with a free demo! |
Buy Dow Jones stocks
Some indexes contain hundreds or even thousands of shares. This is not the case with the Dow Jones: this index only contains 30 stocks. Therefore, it is easy to buy (a portion of) the Dow Jones stocks yourself.
You can buy American stocks at low fees through an online broker. On this page, you can immediately see which brokers offer this possibility.
Active speculation
I also like to speculate on the price development of an index. You can do this by using CFDs; these allow you to use leverage and speculate on both increasing and decreasing stock prices. However, speculation is only suitable for the more experienced investor with a higher risk tolerance. Use the button below to open a demo and try the possibilities:
The composition of the Dow Jones index
The Dow Jones is an unweighted index. This means that all companies listed on the index have the same weight for the market value. This contrasts with, for example, the S&P 500 index
The S&P 500 is a weighted index, where companies with the highest market value have the heaviest weight.
Furthermore, the composition of the Dow Jones index is relatively stable. The index includes companies such as McDonald’s, Pfizer, Boeing, and Coca-Cola.
Price movements of the Dow Jones
The speed at which the Dow Jones grows has increased over time. It took until 1972 to reach 1,000 points and until 1999 to reach 10,000 points. 20,000 points were then reached in 2019, and in 2019, the 25,000 points were achieved.
However, this does not mean that the Dow Jones only moves upward. During interim periods, there have been significant crashes in which the index became much less valuable. Therefore, it is recommended to invest in the Dow Jones with a long-term vision. For example, by periodically investing a fixed amount, you can prevent investing all your money just before a major crash.
Are you curious about how your wealth can develop when you periodically invest in an index? With this free tool, you can directly calculate your expected return!
Which companies are in the Dow Jones?
In the financial world, you often hear people ask, “How did New York do today?” or “How did the market perform today?” In both cases, these people are likely referring to the Dow Jones, as this is the most commonly used index. The index is more popular than the S&P 500 Index and the NASDAQ Composite Index.
The Dow Jones Industrial Average is a benchmark that tracks US stocks that are considered leaders of the economy and are listed on the Nasdaq and NYSE. The DJIA includes 30 large-cap companies, which are selected by the editors of The Wall Street Journal.
None of the stocks that were originally in the Dow Jones are still in the index. General Electric was the longest-running company in the index, for a total of 110 years.
The history of the Dow Jones index
The Dow Jones index was founded in 1896 by Charles Dow and Edward Jones. The index was named after these two men. In the first years of the index, the Dow Jones consisted of 12 industrial companies.
The performance of industrial companies is often considered synonymous with that of the overall economy, making the Dow Jones Industrial Average an important measure of broader economic health. Although the health of the economy is now linked to many other sectors, the Dow Jones Industrial Average is still considered an influential indicator of the US economy.
Who is Dow Jones?
Dow Jones was not one person, but two of the three people who founded Dow Jones & Company in 1882. Charles Dow, Edward Jones, and Charles Bergstresser founded the company together. In 1889, they then founded The Wall Street Journal, which is still one of the world’s most influential financial news sources.
Dow was known for his ability to explain complex financial news to the general public. He believed that investors needed a simple benchmark to indicate whether the stock market would rise or fall. Dow chose several industrial stocks for the first index, and the first reported average was 40.94.
Dow Jones – frequently asked questions
The Dow Jones Industrial Average groups together the prices of 30 of the most traded stocks on the New York Stock Exchange (NYSE) and the Nasdaq. It is an index that helps investors determine the overall direction of US stock prices.
The Dow Jones Industrial Average is called the Dow Jones because it was developed by Charles Dow and Edward Jones of Dow Jones & Company.
The Dow Jones Industrial Average, or simply the Dow, is a way to measure the overall direction of the stock market. It includes the prices of 30 of the most actively traded stocks. When the Dow rises, it is considered bullish, and most stocks usually perform well. When the Dow falls, it is bearish, and most stocks usually lose value.
