An index is a tool we can use to measure movement over time. In the stock market, we use indices to track the performance of a selection of listed
companies. This could include all the companies listed on the market, or all the companies in a certain sector. In inflation
, we use an index to track the price of certain goods over time. An index is not a financial instrument in itself. It’s simply a way to measure what things are doing over time.
These posts discuss this in more detail:
Podcast: Index all the things
Podcast: The price-weighted index
ETF: When companies fall out of the index