How to invest in the NYSE
How to get trading on the world’s largest stock exchange.
What is the NYSE?
The New York Stock Exchange (NYSE) is the largest equities-based exchange in the world. Located on Wall Street in New York City, it traces its roots back to 1792. It houses many of the oldest publicly traded US companies and has an equity market capitalization of over $30.1 trillion as of July, 2020.
The NYSE is open for trading weekdays from 9:30 a.m. to 4 p.m. ET. Trades are conducted in-person through floor trades and electronically through online brokerages.
What is the NYSE Composite?
The NYSE Composite is an index that tracks every common stock listed on the exchange. The Composite is comprised of over 1,900 stocks, offering investors a comprehensive gauge of the market as a whole. The index is maintained by S&P Dow Jones Indexes, the same company responsible for monitoring the S&P 500 and the Dow Jones Industrial Average (DJIA).
How to invest in the NYSE
There are two ways to invest in the NYSE: stocks and ETFs.
Individual stocks offer targeted investment opportunities, best suited to investors looking to back specific companies. Stocks can offer high-yield returns but tend to be more volatile than ETFs.
If you want to invest in the New York Stock Exchange without purchasing stocks, consider purchasing an index fund or ETF. These funds track the performance of stocks on the NYSE and can be a convenient way to diversify your portfolio with a single purchase. The value of your fund is directly tied to the performance of the market — if the stocks your fund tracks go up, so does the value of your fund.
There are hundreds of index funds available for the NYSE, so there’s likely to be one that suits your investing goals. Many of the most famous stock market indexes, such as the Dow Jones, NYSE Composite and S&P 500, also track stocks listed on the NYSE.
Before you can purchase stocks or ETFs, you’ll need a brokerage account. Here’s a snapshot of the investment process:
- Choose a trading platform. When choosing a platform, make sure it offers access to the securities you prefer to trade. Some platforms specialize in derivatives trading, while others offer access to specialty markets, like forex and cryptocurrency. Different brokers also have different fee structures, so find the one that’s most cost-effective for your trading strategy.
- Open a share-trading account. Once you’ve selected a broker or platform, you’ll need to open a trading account. The broker will ask you to enter some basic personal information and to connect an external bank account.
- Deposit funds. Before you can begin trading, you’ll need to fund your account with a deposit.
- Buy stocks. Most platforms provide research tools that allow you to filter available securities by exchange, market, sector and company. Once you’ve found a stock you’d like to purchase, submit your order.
- Monitor your investments. Log in to your brokerage account to track your investments.
Compare NYSE trading platforms
Compare trading platforms that offer access to the NYSE below.
How is the NYSE performing?
The right investment strategy for your portfolio depends on your risk tolerance and long-term investment goals.
This graph tracks how the NYSE has performed historically. Toggle between the options on the graph to see data by month or year.
How much does it cost to invest in the NYSE?
The amount you pay to invest depends on the specific broker or trading platform you use, as each has its own fee structure. When comparing platforms, look for its fees and cost structure — this can have a big influence on the cost of investing.
If you’re exclusively interested in swapping stocks, there’s good news: Very few brokers charge commissions on stocks. In fact, commission-free stock trading is available on all of the following platforms:
Outside stock commissions, there are several other brokerage account fees to be on the lookout for. Every platform is different, so compare your options across multiple brokers to find the pricing you’re most comfortable with:
- Options fees. Most options contracts cost $0.65 to $1 to trade.
- Futures fees. Brokers that offer futures typically charge $2.75 per trade.
- Mutual funds fees. Most brokers charge between $27.50 to $49.99 per no-load mutual fund.
- Account transfer fees. Expect to pay $50 to $75 when transferring funds to an external account.
- Broker-assisted trades. Platforms that offer broker-assisted trades typically charge $24.99 to $32.95 for the service.
Popular ETFs that track the NYSE include:
- Guggenheim S&P 500 Pure Growth ETF (NYSE Arca|RPG)
- iShares Core S&P Total US Stock Mkt (NYSE Arca|ITOT)
- iShares NYSE Composite Index Fund (NYSE Arca: NYC)
- iShares Russell 3000 Index (NYSE Arca|IWV)
- Schwab Fundamental U.S. Broad Market Index ETF (NYSE Arca|FNDB)
- Schwab US Broad Market ETF (NYSE Arca|SCHB)
- Vanguard Total World Stock (NYSE Arca|VT)
- Vanguard Total Stock Market (NYSE Arca|VTI)
- Vanguard Total International Stock (NYSE Arca|VXUS)
- Vanguard Russell 3000 (NYSE Arca|VTHR)
Why should I invest in the NYSE?
The New York Stock Exchange is by far the world’s largest stock exchange, with a total market capitalization of over $30 trillion. It features over 2,800 stocks from some of the most valuable companies in the world, including Johnson & Johnson, JPMorgan Chase, ExxonMobil and Wal-Mart. If you’re looking to diversify your portfolio, the NYSE has plenty to offer.
With many brokers and trading platforms now offering easy access to US stock markets, investing in the NYSE can be a good way to broaden your portfolio and get exposure to successful stocks.
What are the risks of investing in the NYSE?
No investment is risk free, no matter how large and successful the market. Investing in individual stocks can be risky, as stocks tend to be more volatile than ETFs. There’s opportunity for profit, but if the company you’ve invested in goes under, you’ll suffer a loss.
ETFs provide greater stability in an investor’s portfolio but also carry risk. Funds that track the entire NYSE suffer from the same vulnerability as other large index-tracking funds: they’re dominated by large-cap stocks. Big index-tracking funds are cap weighted, which means that companies with the highest market cap have the biggest impact on the index’s performance. This can result in skewed index data.
The best way to build a truly diversified portfolio is to invest in funds from large and small indexes.
The New York Stock Exchange remains one of the most prolific in the world, housing some of the largest and most successful publicly-traded companies on the market. Anyone with a brokerage account can invest. Review your trading platform options with multiple providers to find the account that fits your investment needs.
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