Are Stocks Better or Worse Than Mutual
Funds?
First of all, we have model portfolios that
consist of stocks and other model portfolios that consist
of mutual funds. So obviously, we recommend both
stocks and mutual funds, depending on the type of investor
that you are. Having said that, we have to admit that we are
biased toward stocks when comparing them to mutual funds.
We like the control you can have with owning individual stocks
that you can't have when owning mutual funds. And we also
like the performance we have been able to achieve with individual
stocks (
31.9% per year since 1998). However, each has advantages over the
other. That why some of our recommended portfolios use stocks
and others use mutual funds.
The advantages of mutual funds are diversification
and professional management. For as little as zero down and
$50 a month, you can get started with the mutual fund in our
Beginner's Portfolio and instantly your money is spread over
numerous companies. Plus, if you choose the right funds, you
will be have competent fund managers choosing what to invest
in for you.
With individual stocks, it's a little harder
to get instant diversification. But it's easier than it used
to be. Now with online commissions at $5 per trade or even
lower, a person can build a diversified portfolio with around
$2,000-$2,500 dollars by investing $100 into 20-25 stocks.
Subscribers can achieve this with our Primary Stock Portfolio
or our High-Dividend Blue Chip Stock Portfolio.
As for professional management, with individual
stocks, you (or your stock broker) must be the manager. Or
you can choose to follow the guidance of an investment newsletter
such as ours. If you choose the correct stocks, you will outperform
most, if not all, of the mutual funds, like
we have.
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