Are index-tracking ETF popular in Japan?
The Japanese stock market offers a wide selection of popular ETFs tracking the various indices and sub-indices of the Tokyo Stock Exchange.  See this page from the Japan Exchange Group site for a detailed listing of the ETFs being offered on the Tokyo exchange. As you have suggested, one would expect that Japanese investors would be reluctant to track the local market indices because of the relatively poor performance of the Japanese markets over the last couple of decades.  However, this does not appear to be the case.  In fact, there seems to be a heavy bias towards Tokyo indices as measured by the NAV/Market Cap of listed ETFs.  The main Tokyo indices - the broad TOPIX and the large cap Nikkei - dominate investor choice. The big five ETFs tracking the Nikkei 225 have a total net asset value of 8.5Trillion Yen (72Billion USD), while the big four ETFs tracking the TOPIX have a total net asset value of 8.0Trillion Yen (68Billion USD).  Compare this to the small net asset values of those Tokyo listed ETFs tracking the S&P500 or the EURO STOXX 50.  For example, the largest S&P500 tracker is the Nikko Asset Management S&P500 ETF with net asset value of just 67Million USD and almost zero liquidity.  If I remember my stereotypes correctly, it is the Japanese housewife that controls the household budget and investment decisions, and the Japanese housewife is famously conservative and patriotic with their investment choices.  Japanese government bonds have yielded next to nothing for as long as I can remember, yet they remain the first choice amongst housewives.  The 1.3% yield on a Nikkei 225 ETF looks positively generous by comparison and so will carry some temptations.
If a stock that makes up a big part of the Dow Jones Industrial   Average decided to issue a huge number of additional shares, that will   make the index go up. At least this is what should happen, since an   index is basically a sum of the market cap of the contributing   companies. No, indices can have various weightings. The DJIA is a price-weighted index not market-cap weighted. An alternative weighting besides market-cap and price is equal weighting. From Dow Jones: Dow Jones Industrial Average™. Introduced in May 1896, the index, also   referred to as The Dow®, is a price-weighted measure of 30 U.S.   blue-chip companies. Thus, I can wonder what in the new shares makes the index go up? If a stock is split, the Dow divisor is adjusted as one could easily see how the current Dow value isn't equal to the sum or the share prices of the members of the index. In other cases, there may be a dilution of earnings but that doesn't necessarily affect the stock price directly as there may be options exercised or secondary offerings made. SO if the index, goes up, will the ETF DIA also go up automatically   although no additional buying has happened in the ETF itself? If the index rises and the ETF doesn't proportionally, then there is an arbitrage opportunity for someone to buy the DIA shares that can be redeemed for the underlying stocks that are worth more in this case. Look at the Creation and Redemption Unit process that exists for ETFs. What JoeTaxpayer means is that you can sell one ETF and buy another that will perform substantially the same during the 30 day wash sale period without being considered substantially the same from a wash sale perspective more easily than you could with an individual stock. For example, you could sell an S&P 500 index ETF and then temporarily buy a DJIA index ETF. As these track different indexes, they are not considered to be substantially the same for wash sale purposes, but for a short term investing period, their performance should still be substantially the same. It depends on the exact level of risk that you want, but if you want to keep your risk close to zero you're pretty much stuck with the banks (and those rates don't look to be going up any time soon). If you're willing to accept a little more risk, you can invest in some index tracking ETFs instead, with the main providers in Australia being Vanguard, Street State and Betashares.  A useful tool for for an overview of the Australian ETF market is offered by StockSpot. The index funds reduce your level of risk by investing in an index of the market, e.g. the S&P 200 tracked by STW.  If the market as a whole rises, then your investment will too, even though within that index individual companies will rise and fall. This limits your potential rate of return as well, and is still significantly more risky than leaving your cash in an Aussie bank (after all, the whole market can fall), but it might strike the right balance for you. If you're getting started, HSBC, Nabtrade, Commsec and Westpac were all offering a couple of months of free trades up to a certain value.  Once the free trades are done, you'll do better to move to another broker (you can migrate your shares to the others to take advantage of their free trades too) or to a cheaper broker like CMC Markets. One difference is the bid/ask spread will cost you more in a lower cost stock than a higher cost one. Say you have two highly liquid stocks with tiny spreads: If you wanted to buy say $2,000 of stock: Now imagine these are almost identical ETFs tracking the S&P 500 index and extrapolate this to a trade of $2,000,000 and you can see there's some cost savings in the higher priced stock. As a practical example, recently a popular S&P 500 ETF (Vanguard's VOO) did a reverse split to help investors minimize this oft-missed cost. To add to Dheer's point, the vast majority of retail investors will have to pay fees and use up a large amount of valuable time on the entrance and exit of each stock, and each and every time you rebalance as the index weightings change. These also add up extremely fast vs the few basis points the large and liquid ETFs charge for this service. "There are some useful answers here, but I don't think any of them are quite sufficient.  Yes, there are some risks involved in CFD trading, but I will try and give you information so you can make your own decision. Firstly, Cyprus is part of the EU, which gives it a level of credibility.  I'm not saying it's the safest or most well regulated market in the world, but that in itself would not particularly scare me away.  The far more important issue here is the risk of using CFDs and of eToro themselves. A Contract for Difference is really just a specialization of an Equity Swap.  It is in no way like owning a real stock.  When you purchase shares of a company you own a real Asset and are usually entitled to dividends and voting rights.  With a CFD, what you own is one side of a Swap contract.  You have a legal agreement between yourself and eToro to ""swap"" the return earned on the underlying stock for whatever fees eToro decide to charge.  As already mentioned, CFDs are not available to US citizens. Equity swaps have many benefits in financial markets.  They can allow access to restricted markets by entering into swaps with banks that have the necessary licenses to trade in places like China.  Many ""synthetic"" ETFs use them in Europe as a way to minimize tracking error as the return is guaranteed by the swap counterparty (for a charge). They also come with one signficant risk: counterparty credit risk.  When trading with eToro, for as long as your position is open, you are at risk of eToro going bankrupt.  If eToro failed, you do not actually own any stocks, you only own swap contracts which are going to be worthless if eToro ceased to exist. CFDs also have an ongoing cost to maintain the open position.  This makes them less suitable for buy and hold strategies as those ongoing costs will eat into your returns.  It's also not clear whether you would receive any dividends paid by the stock, which make up a significant proportion of returns for buy and hold investors.  eToro's website is fairly non-committal: eToro intends to offer a financial compensation representing the dividends which will be allocated on stocks, to the extent such dividends shall be available to eToro. All of these points expose what CFDs are really for - speculating on the stock market, or as I like to call it: gambling.  If you want to invest in stocks for the long term, CFDs are a bad idea - they have high ongoing costs and the counterparty risk becomes significant.  Wait until you have enough money and then buy the real thing.  Alternatively, consider mutual funds which will allow you to purchase partial shares and will ensure your investment is better diversified across a large number of stocks.  If however, you want to gamble and only keep your position open for a short time, these issues may not be of concern to you. There's nothing wrong with gambling, it can be fun, many people gamble in casinos or on football matches - but bear in mind that's what CFDs are for.  CFDs were in fact originally created for the UK market as a way to avoid paying capital gains tax when making short term speculative trades.  However, if you are going to gamble, make sure you're not putting any more than 1% of your net worth at risk (0.1% may be a better target). There are a few other ways to take a position on stocks using less money than the share price: Fortunately, eToro do not allow leveraged purchase of stocks so you're reasonably safe on this point.  They claim this is because of their 'responsible trading policy', although I find that somewhat questionable coming from a broker that offers 400:1 leverage on FX pairs. One final word on eToro's ""social trading"" feature.  A few years ago I was in a casino playing Blackjack.  I know nothing about Blackjack, but through sheer luck of the draw I managed to treble my money in a very small amount of time.  Seeing this, a person behind me started ""following"" me by putting his chips down on my seat.  Needless to say, I lost everything, but amazingly the person behind me got quite annoyed and started criticizing my strategy.  The idea of following other people's trades just because they've been lucky in the past sounds entirely foolish to me.  Remember the warning on every mutual fund: Past performance does not guarantee future returns" If you check out China Stock Markets Web provides details on all things that trade on there. It covers the Hang Seng Index, SSE Index, and SSE Component Index. There is also tons of information for investors on the exchange website here. I have only found solution for UK residents so far, see the article on This Is Money: Cheapest index-tracking funds: Trackers with the lowest charges - and the best ways to invest in them