which one is better if want to start small and dont have alot experience?
2006-07-30 13:57:25 · 5 answers · asked by Simply Me 5 in Business & Finance ➔ Investing
If you want a decent return, obviously mutual funds are good. They have two advantages -
a) Your tiny sum is accumulated with tiny sums from thousands of other investors and then invested appropriately. That gives them the ability to move their money around and still get good returns.
b) They pool in everyone's money and diversify their investments. You can't do that alone since you would have a small sum.
But if you have a small amount which you are willing to risk, you can invest in stocks yourself. That way, you can learn about the stock market on your own, without a mutual fund spoonfeeding you. You'll probably not end up losing more than 20% of your capital, worst case, so calculate how much you are willing to lose. Its much better than gambling. You could also win a similar amount in a few years. That beats all other investments, except perhaps real estate. Also, make sure you start by investing in well known companies. And forget about 'windfall' gains till you begin to get comfortable with the market.
2006-07-30 14:06:33 · answer #1 · answered by Suhrud B 2 · 0⤊ 0⤋
If you don't know then you probably don't have the expertise to pick a good stock so your better off sticking to mutual funds which won't go up a ton but shouldn't go down a ton either.
THe best investors don't OVERDIVERSIFY. Regular investors diversify too much, to the point where they will never beat the market average because they own a few shares of so many companies that it pratically is an average...
If you know your stuff then you can pick a few really good companies and ride them to immense wealth (like all the richest people have... Who gets rich in a mutual fund? Not the investor usually. lol.
2006-07-31 18:36:44 · answer #2 · answered by ulchka 3 · 0⤊ 0⤋
Mutual funds are the safest bet. They are very steady and don't involve too much risk. However, if you are looking at long-term investment, stocks are better because even ifthey go up and down, they will grow over the long haul and most of the time at a much greater rate than the safer mutual funds.
Take that into consideration, along with how long you plan to invest and how much risk you are willing to take.
2006-07-30 14:02:12 · answer #3 · answered by teachingazteca 3 · 0⤊ 0⤋
If you have to ask the question.... the answer is a Mutual Fund.
BTW: Mutual funds are not safe. They simply reduce your risk because you have many holdings in one instrument. Choose your Mutual Fund(s) carefully. Learn about "asset allocation"
2006-07-30 15:29:50 · answer #4 · answered by Common Sense 7 · 0⤊ 0⤋
stocks. mutual funds won't make you rich anytime soon cuz most are very safe.
2006-07-30 16:25:56 · answer #5 · answered by Chowder 4 · 0⤊ 0⤋