How to Invest in the Dow Jones: Best Methods and Tips

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The Dow Jones Industrial Average is one of many stock indices that track the performance of the stock market, or at least an important segment of it. In the case of the Dow Jones Industrial Average, also called simply the Dow or the DJIA, that segment is 30 of the largest publicly traded U.S. stocks across a variety of industries, selected to represent America’s strongest blue chip companies.

See: 3 Things You Must Do When Your Savings Reach $50,000

As the DJIA is an index, and not an individual company in its own right, you can’t buy shares. But you can invest in funds that track the index or in the companies that serve as its components.

Understanding the Dow Jones Index

The Dow Jones Industrial Average (DJIA) is one of the oldest and most recognized stock market indexes, tracking 30 of the largest and most established U.S. companies. Once focused solely on industrial firms, the Dow now includes major players in technology, healthcare, and finance, making it a benchmark for blue-chip stocks and overall market sentiment.

What sets the Dow apart is its price-weighted calculation. Companies with higher share prices have a greater impact on the index than those with lower prices, regardless of their actual market size. While this method is considered outdated compared to market-cap weighting used by indexes like the S&P 500, the Dow remains a popular measure of U.S. economic health and a go-to option for investors seeking stability through blue-chip stocks.

As of July 22, 2025, the Dow is trading around 44,338 points. Goldman Sachs, at about $660 per share, influences it roughly 10 times more than Coca??’Cola or Cisco, whose shares hover in the $60s.

Different Ways To Invest in the Dow Jones

The Dow is not a company in its own right. That means you can’t buy stock in the index itself. However, you have three other ways to invest. You can purchase shares in an index mutual fund, an index exchange-traded fund, or you can buy individual stocks in the companies, called components, that make up the fund.

Investing Directly in Dow Jones Stocks

Investing in all 30 DJIA stocks used to be cumbersome and expensive, but with the rise of no-commission trading and the ability to purchase fractional shares, you can replicate the Dow in your own account fairly easily these days. If you invest directly in the individual stocks themselves, it can actually be the most cost-effective way to own them, as you won’t be paying the annual fees you would with a mutual fund or ETF and you can likely buy them all commission-free.

Investing in Dow Jones ETFs

Exchange-traded funds (ETFs) pool investors’ money to buy a basket of stocks or other securities, similar to mutual funds. You earn returns through share price growth and dividends, which can be reinvested, but you own shares of the fund–not the underlying stocks.

Like index mutual funds, most ETFs are passively managed to mirror an index’s performance. The key difference is that ETFs trade like stocks, letting you buy or sell shares at market prices throughout the trading day. For Dow investors, the simplest option is the SPDR Dow Jones Industrial Average ETF Trust (DIA), the only ETF that directly tracks the DJIA.

Investing in the Dow Jones via Mutual Funds

A mutual fund pools money from many investors to buy a mix of stocks or other securities. When it follows an index–like the Dow–it’s called an index fund.

Instead of owning individual stocks, you own shares of the fund and earn returns through dividends, share price growth, and capital gains, which can be reinvested. Expenses are deducted before distributions, and you’ll owe taxes on dividends and gains.

For Dow investors, a mutual fund offers instant diversification across 30 blue-chip stocks with professional management. Currently, the only open-ended Dow mutual fund is the Rydex Dow Jones Industrial Average Fund from Fidelity.

The Benefits of Investing in the Dow Jones

Many conservative investors, or those seeking a balance of growth and income, favor blue-chip stocks. These are large, financially strong companies with steady cash flow, strong reputations, and established products that are hard for competitors to disrupt. Most also pay reliable dividends, often increasing them over time.

The Dow Jones Industrial Average (DJIA) is a classic blue-chip stock index, making it a go-to choice for investors seeking stability while maintaining a diversified stock portfolio.

Historically, the Dow has delivered solid returns, though it hasn’t kept pace with the broader S&P 500. It has, however, been less volatile. Over the past 10 years, the DJIA averaged a 9.47% annual return, compared to 11.30% for the S&P 500. A $10,000 investment in the Dow a decade ago would be worth about $25,684 today, while the same amount in the S&P 500 would have grown to $30,793.

Risks and Considerations When Investing in the Dow Jones

Investing in the Dow Jones gives you exposure to well-established blue-chip companies, but it’s not without risk. Prices can still swing sharply, and the index only includes 30 large-cap–mostly mega-cap–stocks, leaving you with no small- or mid-cap exposure.

If you want broader diversification, consider adding S&P 500 or total market funds, which include hundreds or even thousands of stocks. You can also manage risk by mixing in other assets, like bonds, and reviewing individual Dow components–don’t hesitate to move away from underperformers if they drag on returns.

The Dow can be a solid choice if your goal is to invest in tried-and-true blue chips. But if you want a wider slice of the market, the S&P 500 or a total stock market ETF may be a better fit. You can invest through individual stocks, ETFs, or mutual funds online–or consult a financial advisor if you’re just getting started.

Alternatives to Investing in the Dow Jones

While the Dow Jones Industrial Average (DJIA) is a popular benchmark for tracking U.S. blue-chip stocks, it’s not the only way to invest in the market. Depending on your goals, risk tolerance, and desire for diversification, you might consider these alternatives:

• S&P 500 Index Funds or ETFs. Broader than the Dow, the S&P 500 includes 500 of the largest U.S. companies across multiple sectors, offering more diversified exposure.
• Total Stock Market Funds. These funds track thousands of U.S. stocks, including large-, mid-, and small-cap companies, giving you more comprehensive market coverage.
• Nasdaq-Tracking ETFs. If you’re interested in tech and growth-oriented companies, Nasdaq ETFs focus heavily on technology and innovation leaders.
• International Stock Funds. Diversify beyond U.S. companies by investing in developed and emerging markets through global or international ETFs.
• Dividend-Focused Funds. If you like the income potential of Dow stocks, dividend ETFs or mutual funds invest in companies with strong dividend histories, often with broader sector exposure.
• Sector-Specific ETFs. Want to bet on a particular industry? Sector ETFs allow you to focus on technology, healthcare, energy, or other industries without being tied to the Dow’s limited stock list.

The bottom line: The Dow is just one piece of the investing puzzle–choosing a mix of broader index funds or specialized ETFs can give you better diversification and help align your portfolio with your long-term goals.

Data was compiled on July 22, 2025, and is subject to change.

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