What's better, mutual funds or single stocks?

Answer 1

If you have the wherewithall to do the research and sufficient funds maintain a portfolio of 20 stocks, that is the best approach. It saves you the 1.5% annual expenses of the mutual fund. However, there are instances where the mutual funds are better investments. These are investments in small cap stocks and investments in foreign stocks. They have more expertice and more resourses to apply to the task, and it is worth the 1.5% annual expenses.

Answer 2

Diversification is the key. If you have enough money to diversify yourself properly ($200,000+) Then you can invest in individual stocks. Otherwise you are better off choosing mutual funds to invest in. Too many people try to simply go for the highest return. However you also need to be conscious of downside protection. If you have 20+ years to invest your highest return would probably come from investing in the S&P 500. This can be done most inexpensively through an ETF (IVV). But remember that during the 90's the S&P grew at about 18% per year only to see it decline by about 50% from 2000 to 2002. The best approach is to go for steady gains by diversifying among different styles of investing. The first question you need to ask is what should your overall asset allocation be? How much stcoks? how much bonds? Once this desicion is made then you need to diversify different styles ie: Large Cap Growth/Value, Mid Cap Growth/Value, Small Cap Growth/Value, International and Emerging Markets. You can also diversify styles among bonds. Government, High Grade Corporates, High-Yield Corporates (Junk). Foreign, Emerging Markets. If you can get an average of 8% or greater over a long period of time you will be doing well. Good Luck

Answer 3

Over time, it is very hard for the mutual fund or the individual stock investor to beat the S&P 500 benchmark. So you would be wise to park your money in an S&P 500 index fund (recommend Vanguard funds because they have the lowest fee structure). In the long run, you money will grow faster than any other way, with less fees and commissions paid to boot.

If you insist on individual investing, recommended reading is: "The Little Book that Beats the Market" by Joel Greenblatt. Sold in Barnes & Noble as well a Borders and Amazon.

Answer 4

If you buy a mutual fund, an expert with millions of dollars of resources, experience and more time than any individual, can make an educated decision about which stocks to buy.

I'll put my money in mutual funds.

Answer 5

Single stocks if you know how to play the markets. If you don't then go with mutual funds, where somebody else will do the playing.

Answer 6

I prefer mutual funds

Answer 7

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