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How to invest in the NYSE Composite Index
The NYSE Composite Index (NYA) offers a great opportunity to invest in a range of high performing stocks. There are numerous ways to invest in the index, so we’ve made this page to walk you through everything you need to know in order to make informed investment decisions.
Where can I buy into the NYSE Composite Index?
What is the NYSE Composite Index?
It is a stock market index consisting of more than 2,000 stocks, tracking all stocks traded on the New York Stock Exchange. About 80% of the stocks traded on the index are US-based, while the rest are from all over the world. The index is heavily focused on 10 of the biggest global industries, which include oil and gas, consumer goods, industrials, and healthcare.
Is it a good investment?
It definitely can be, but the important question is whether it’s right for you. The top four stocks on this index have a combined market capitalisation of nearly $2 trillion by themselves, demonstrating that the index is home to a number of global powerhouse companies which are likely to be resilient throughout market ups and downs. However, when bear markets set in across the world, all indices suffer.
How do I invest in the NYSE Composite Index?
If you want to invest in the index, follow these three important steps:
- Choose an investment type
- Use our top tips to succeed
- Choose a platform to invest with
1. Choose investment type
Different investment types each have their pros and cons. The one you choose could depend on multiple factors, such as how much a platform charges in transaction fees, and the quality and quantity of investment advice you’re seeking. Here’s a look at the methods you can use to invest:
ETFs
An ETF (exchange-traded fund) is an investment fund traded on a stock exchange during regular stock market hours – something not offered by other investment products. ETFs consist of a collection of assets such as bonds or commodities, or a collection of stocks such as the stocks you’ll find in the NYSE Composite. By following the performance of 2,000 stocks at once, an NYSE ETF gives you the benefit of diversification, without the high fees that come with some other methods.
Individual stocks
If you’re aiming for bigger gains, you can try owning only the top stocks in the index. To do that, though, it’s likely you’ll need to buy a huge number of stocks one at a time, then pare down your holdings until you have a smaller batch of the best performers. This approach is generally not advised for indices as varied as the NYSE Composite, however, as buying even a small portion of the index’s 2,000 stocks will eat up a lot of time and cost a large amount in transaction fees.
Mutual funds
A mutual fund is an investment fund that’s run by a professional money manager and can be bought either through a broker, or the company that administers the fund. The money manager pools capital from many different investors then invests it into different assets. An NYSE fund (also called an index fund) allows you to invest in all of the index’s stocks at once.
Mutual funds do have a few drawbacks. One is that you can only buy a mutual fund at the end of the stock market’s trading day, not during regular market trading hours. Also, mutual funds charge higher fees than NYSE ETFs do. So if you’re going to invest in NYSE funds, consider a buy-and-hold approach that avoids frequent transactions, given the cost and relative complexity of this kind of investment.
2. Use our top tips to be a successful investor
Before you invest, check out Invezz’s top investment tips:
- Do your research. Start by studying the index’s recent and historical performance, as well as how the index compares to other investments. After that, plot out the types of gains you’re hoping to achieve in a set time frame, as well as the size of the losses you’re emotionally and financially equipped to handle. The more prepared you are coming into an investment, the more able you’ll be to cope with emotions such as fear and greed that can cloud your judgment under pressure.
- Set a budget. Consider both your risk tolerance and the amount of money you can afford to lose. One way to manage risk is to set a stop-loss order after you make your investment, so that you can limit the size of your potential losses. If you let your losses escalate, you could damage both your confidence and your ability to afford future trades. Setting a budget will help make sure you stay in the game even when markets are being uncooperative.
- Select the right platform. Pick an investing platform based on your specific investment goals. If all you care about is getting the lowest transaction fees, that’s a very different approach than if you want to benefit from personal investment advice. It’s vital that you figure out your goals before you look for a platform to handle your investments.
- Grow your investments gradually. If you’re just starting off as an investor, consider starting slowly by investing just a small amount of money at first. As you gain experience and expertise, you can try a more complex investment approach and stake more of your capital.
- Think long-term. If you’re trying to land the biggest possible gains, buying and holding the index long-term could be a fruitful plan. However, even if engaging in short-term NYSE trading, you should always keep an eye on the bigger picture and the likely future movement of the market.
3. Choose a platform to invest with
Here’s a rundown of the options you can use to invest:
- Brokers & NYSE trading platforms. Online brokers offer easy-to-use tools that make for a seamless trading experience (even for beginners looking into NYSE trading), with low transaction fees to boot. What you gain in affordable transaction costs you lose in customer service, though. Most online brokers don’t provide in-depth investment advice that some investors might want. If you’re looking for higher-level investment guidance, you should consider other options.
- Robo advisors. Robo advisors use algorithms to execute trades. Though the trade execution process is automated, some robo advisors will still allow you to discuss your investment strategy with a human being in order to create a personalised approach. Combined with relatively low NYSE trading fees, that makes for an attractive investing option for many people. Just keep in mind that robo advisors don’t usually offer the same level of investment guidance that a top financial advisor does.
- Financial advisors. Financial advisors provide the highest level of advice that you’ll find among any of these investment options. Your financial advisor will review your financial goals, explain different investment options, then help you stay on track long after you’ve made your first trade. All of that customer service naturally comes with a higher price tag. That extra cost can sometimes be worth it, but it is unlikely to be worth it in this case because investing in any index is a simple process nowadays.
- Banks. Investing in the index with your bank gives you the convenience of housing all of your financial ventures with one institution. On the downside, banks tend to charge high fees, without providing the level of service that dedicated financial advisors offer. That means you’re usually better off trying a different approach unless convenience is your top priority.
Ready? Here’s our top recommended broker
What should I do now?
If you’re ready to invest, just log into your chosen platform’s website, decide the specific type of investment you want to make, then click buy. Keep tabs on your investment after that, so you can be ready to change gears if the market becomes volatile and unstable.
Try some of our investment courses for beginners
Not yet ready to invest? That’s ok. You can improve your investing skills by reading the easy-to-follow educational investing courses and news updates that we offer right here on this site.
Stock Markets 101
Long-term Stock Investing
Short-term Stock Trading
Fact-checking & references
Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >