A stock market index tracks the performance of a group of shares, giving you a snapshot of how a market, sector, or economy segment is doing. The S&P 500, for example, follows 500 large US companies; when people say "the market was up today," they often mean a major index rose.

How indexes work

Indexes select stocks by rules: company size, industry, country, or other criteria. Some weight companies by market capitalization (larger firms count more); others use equal weighting. The index level changes as the included stocks' prices move.

You can't buy an index directly, you invest through products that track it, like ETFs or index funds.

Why indexes matter

Indexes are benchmarks. Investors compare their portfolio returns to an index to see if they're beating or lagging the market. Fund managers use them as targets for passive investing strategies.

Indexes and bunq

Understanding indexes helps you choose diversified investments. With bunq Stocks, you can hold individual shares or products linked to broad market exposure, alongside everyday banking in Bank Accounts.

Frequently asked questions

Does an index include every stock?

No. Each index uses specific criteria. Thousands of stocks exist globally; popular indexes cover subsets that meet their rules.

Can an index go to zero?

Extremely unlikely for broad indexes, they'd require essentially all included companies to collapse. Narrow sector indexes can fall sharply in downturns.

What's a good index for beginners?

Broad market indexes spread risk widely. Research funds that track them and match your region, currency, and risk tolerance.