04 Jun Mutual fund vs. individual stocks?
Investors looking to invest in the stock market for the future are usually faced with two main options – mutual funds or individual stocks. Mutual funds are an actively managed portfolio of stocks, designed to beat the market with the assistance of a fund manager. Individual stocks can be bought by any investor through a brokerage, and it becomes the responsibility of the individual investor to maintain his or her portfolio. Mutual funds are widely regarded as a passive form of investing, while investing in individual stocks is a more active form.
I’m going to go out on a limb here and say that a fund manager probably knows more about managing stocks than your average investor. Also, most people are familiar with mutual funds because they have or have had one with their employer (401k). Typically, mutual funds tend to be less risky because of the diversification within the fund.
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