You scan the current list of blue-chip stocks on the Dow Jones Industrial Average and find the perfect stock. You’re ready to buy it through your broker.
But you could be making a mistake if you do.
Dow Jones investing is a simple process, but the best way to do it is through ETFs.
Moreover, there are better ways to save money as you invest in Dow Jones. For example, shop around for discounted or online brokers.
And don’t fall into the trap of believing that every Dow Jones stock is viable for your portfolio. Look into a company’s financial records to learn about a company’s track record.
I will show you how to invest in Dow Jones to maximize dividend income and minimize risk to your portfolio. Continue reading if you wish to enhance your portfolio.
The Value of ETFs
Many investors stay away from buying individual stocks due to the high risk involved. ETFs offer a compilation of high-valued stocks that are safer bets than individual shares.
Moreover, you can invest in ETFs that specialize in Dow investing.
- Example: Consider the SPDR Dow Jones Industrial Average ETF if you’re looking for one of the safest bets. Not only does it invest in over 99% of dow j stocks, but it also follows the same weighting as Dow Jones. It also charges a less expensive ratio than other ETFs.
There are other Dow Jones ETFs that will offer high yields despite the higher expense ratios. However, ETFs can be more expensive than buying individual stocks due to the risk of a high bid/risk spread. To combat high/risk spread, use limit orders to keep costs low.
Dow Jones Investing Expenses
Before buying the stock, consider how much your brokerage is charging. High fees chip away at your investment income.
There are no-cost ETFs, but they are not always valuable stocks.
If you wish to find solid stocks, you may have to pay brokerage fees.
Shop around for a discount brokerage to reduce expense burdens. However, online or discounted brokers offer fewer services. For instance, brokers usually provide updates on market conditions, but you may not get the best news under a no-fee system.
Down Jones Stocks
If you’re wondering what is the dow today, the value varies on the list of companies available. All 30 varying companies listed on Dow Jones have intrinsic value.
The best way to know the value of the companies is to look through their financial records. The following is a solid checklist when assessing prospective stocks:
- History of innovation
- Company stability
- Dividend payouts
- Annual sales and earnings
- Management changes
Look for a stable history as you research the companies. Reliable companies are more likely to pay dividends on time.
Dow Jones investing has its drawbacks in the form of short-selling. But it’s one of the best indexes that showcase strong investments.
As a general rule, consider ETFs as one of the best ways to invest safely and maximize return.
If you’re new to the world of trading, you can achieve a successful trading venture with the right savvy. To learn more about the basics of trading, check out our page for beginners.