2007-05-02 20:27:55 · 5 answers · asked by greeneyedflavor 2 in Business & Finance ➔ Investing
The answer to your question depends on many factors.
First, how much do you have to invest? If you have over $100K, it could be cost-effective to build a diversified portfolio of individual stocks. Otherwise, any advantages will likely be eaten up by trading costs.
Second, how good are you at stock analysis? You need to be good at knowing not only which stocks to buy and when to buy them, but also when to sell. With mutual funds, you pay the manager to do all that legwork for you.
Third, how much risk are you willing to take? With individual stocks, you could easily lose half (or even all) of your money in a very short time. Historically, the worst case scenario for the most aggressive mutual funds has been about a 25% loss in a one-year span. Of course, the upside potential for individual stocks is much greater, too.
If you do go with stocks, follow this rule of thumb: never put more than 10% of your portfolio in any one stock.
Good luck!
2007-05-03 04:09:47 · answer #1 · answered by El Guapo 7 · 0⤊ 0⤋
Mutual funds in general are not so profitable as owning a diversified portfolio of stocks. That is because of two reasons mainly. They charge a somewhat high management fee, averaging about 1.5% annually and because they have to pay out realized capital gains annually. That does not mean that they are not profitable but it does mean that your profits will be somewhat mitigated.
As with stocks and other investments some are not profitable and some are more profitable than others. About 70% of mutual funds underperform their benchmarks. Consequently index funds have become very popular as a mutual fund investment. They have much lower expense ratios, about 0.5% and they do not in general have realized capital gains.
2007-05-03 01:06:17 · answer #2 · answered by Anonymous · 1⤊ 0⤋
It depends on the mutual fund you pick, as it depends on the stock you pick. You can lose or make money either way.
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2007-05-03 00:30:29 · answer #3 · answered by Robert L 7 · 0⤊ 0⤋
Mutual funds are almost garunteed to make money, but they make less because they are less risky. Individual stocks are more risky, but can return better.
2007-05-02 20:30:39 · answer #4 · answered by Anonymous · 1⤊ 1⤋
best gamble is bet on black or roll some dice. its all the same.
2007-05-02 20:30:21 · answer #5 · answered by ty808 3 · 0⤊ 0⤋