For most stock funds, the required minimum initial investment may be substantially less than what you would have to pay to build a diversified
portfolio of individual stocks.
We do not try to predict or judge the
prices of individual stocks; instead, we focus on a data - driven, risk - based division of capital across broad asset classes.
A diversified portfolio is a portfolio consisting of investments spread across the five main economic sectors as well as a
range of individual stocks.
At the same time, your money will be invested in broad indexes so you won't have the
risk of individual stocks or bonds not doing well.
However, to assume that mutual funds are the only game in town is to overlook the many positive benefits
of individual stock ownership, especially ownership in emerging growth stocks.
Here's another
selection of individual stocks which have a major sale as an actual / potential catalyst (again, please research subsequent news & commentary on these stocks).
A mutual fund company has a very small number of choices, an ETF investor can easily invest in hundreds
of individual stocks as well as ETFs.
Bottom - up investing is a strategy that overlooks the significance of industry or economic factors and instead focuses on the
analyses of individual stocks and companies.
Just as there are many
thousands of individual stocks and / or bonds to choose from, there are also many thousands of packaged products to decide upon.
Returns of individual stocks in the portfolio followed the typical pattern for successful quarters — more winners than losers, and gains of greater magnitude than losses.
A stock ETF could contain hundreds — sometimes thousands — of stocks, making an ETF generally less risky than owning just a
handful of individual stocks.
One thing they can do, usually quite easily, is move their investments
out of individual stocks and actively managed funds and into index funds.
If you think you'll be tempted in this way, it's probably a good idea to steer
clear of individual stocks and online stock - trading sites.
How a particular stock index tracks the market depends on its composition the sampling of stocks, the
weighting of individual stocks, and the method of averaging used to establish an index.
Before index funds, traders who thought they knew something others didn't could turn a profit in transactions with less informed
buyers of individual stocks.
In summary, both mutual funds and ETFs offer investors the opportunity to purchase shares in a wide
array of individual stocks in order to diversify their portfolios and reduce risk.