15 Responses to “If you were/are in your 20's what is better, investing in mutual funds or stocks?”

1. dredude52 Says:
   October 13th, 2009 at 3:00 am

   When you finally choose a Mutual Fund (MF), what sets this one apart from all the others?

   What sets this one apart from all the others? Did it beat the Dow last year? No. If it can’t beat the index it tracks, does that make it a "good" fund? No.

   Let’s look at Investment Company of America (ICA), owned and operated by American Funds (AF). AF is an awesome fund company for a couple of reasons. There are several advantages and disadvantages:

   1.AF is a private company which means they only answer to their MF holders. Fidelity is a good company also, but they are owned by stock holders. In the long run the company that only answers to you, the MF holder, is going to look out for your best interests.

   2.AF also has some of the lowest annual fees to maintain an account of any MF company. All that being said, depending on your situation ICA may or may not be good for you. You need a competent advisor to help you with that.

   3.I would be cautious with ICA as it is one of the largest MF in the world. They may seem like a good thing but it actually can be bad. It means it has much less flexibility to move its money around when conditions warrant it.

   4.As far as EJ goes, they hire people on average who have very little experience in the industry, so at a minimum make sure your rep has a lot of experience and didn’t just start last month at this. They also have agreements with companies like American Funds where their reps get a bigger commission to them then they do with other products. The concern being your advice from EJ might be tainted by the reps desire to get more commission. You need to work with an independent rep to assist you with you decisions; one who will give you all the information and doesn’t have a hidden agenda.

   Now let’s look at MF’s, in general, or the decision to use one at all.

   If you invest in a MF, you have turned that responsibility over to someone else. To me, they are mostly the same, in general, in terms of results. Fewer than 10% can beat the Dow or other index it follows because of their fees. Why would you pay someone you don’t know, whom will almost certainly underperform the market, an annual fee of 2.5% to do something you can do yourself, and do it better by buying an ETF, without any input from you after the initial purchase? An ETF is a publicly traded “Exchange Traded Fund, that trades just like a stock). Just buy the Diamonds (the DJIA ETF) if you want to let it ride on the Dow, or the Spyders (SPY – the S&P 500 ETF), or the Nasdaq (QQQQ), or diversify across the entire market by buying all three. The ETF’s trade just like a stock or MF. If you want to diversify, and you want to Buy and Hold, buy an ETF.

   A MF is always "in" the market, so you are at the mercy of the ups and downs of the Dow. You are unable to manage your risk with a MF, so you can’t put a Protective Stop on a MF, at say 10%, to lock in your profits when the market goes down. You don’t have a clue what’s going to happen. That is not my idea of investing.

   Actually, if done properly, it is more work to investigate all of the MF’s and their advisors and their traders and their fees and their methods, than it is to investigate all the similar applicable info about stocks. To me, it’s more like a conscious choice to be ignorant, to simply and blindly turn your money over to a stranger because they are "listed," like you do at a bank. Stocks are "listed," as are commodities and ETF’s and everything else. With a mutual fund, you’ve just added a whole new set of unknowns to the equation.

   The best you can do in any investment is try to increase your odds of success and reduce your risk. You can do these things yourself, but not in a mutual fund.

   MF’s are so 20th Century. Relics of the past. Unneccessary. Buy an ETF. Or sell an ETF short and bet on the downside. There are two sides to every market, not just the upside.

2. Teri D Says:
   October 13th, 2009 at 3:00 am

   mutual funds i would think. but that depends on how much money you have to invest. and if you had the opportunity to buy stock with really good profittable companies

3. babyrawl Says:
   October 13th, 2009 at 3:00 am

   Both. Spread it around.

4. jeff420rog1 Says:
   October 13th, 2009 at 3:00 am

   depending on how much risk you are willing to take on –
   mutual funds are good because they are a pool of money that is already invested in (hopefully) a diversified portfolio…

   Stocks are indivual interests in a specific company – there is no diversification unless you know a mix of appropriate stocks to spread your money over…

   You’ll probably do better in mutual funds unless you are a stocks expert

5. mai-ling Says:
   October 13th, 2009 at 3:00 am

   I have had bad experiences with mutual funds. Most of them are under the influence of some big firm or capitalist who thinks mainly for itself/himself and not for you. Then there are the costs for administration. Stocks are generally great. I advise you to follow the system of the late Andre Kostolanyi, he was a genius in that area. But right now it seems interest rates are going up, that´s going to be poison for the stock exchange.

6. Adam J Says:
   October 13th, 2009 at 3:00 am

   Investing in stocks in inherently riskier than investing in mutual funds, where your investment is usually spread over a very large number of stocks, though you can make (or lose) more money. (I don’t think there’s much point in investing in a very large number of individual stocks unless you really enjoy investment research). Unless you want to do a lot of research into individual companies I suggest just buying stock in a no load (ie low fee) S&P 500 index fund or exchange traded fund (such as the Vanguard fund or SPDRs.)

7. Big Bully Says:
   October 13th, 2009 at 3:00 am

   Yee.. Haw!!!, my dividend check went into my brokerage account today. This is something you will never see with these crappy mutual funds. Why??? because it went into their pockets and not to mutual fund holder. Gee!!! aren’t mutual funds great!

8. dawn18417 Says:
   October 13th, 2009 at 3:00 am

   Invest in high quality stocks.When you invest in stocks you decide when to sell and this is how you can control your tax implications.When in mutual funds the fund company makes those decisions and the fund could be down for the year and you could still owe taxes because the fund company might of had one big winner and alot of losers so the nav of the fund could be down and you still owe taxes this stinks,buy stock and your in control. You could buy stock in the electric company then join the dividend reinvestment plan and just watch your wealth accumulate of course it will be slow at first but in say twenty years the value really starts to grow quickly.Another thing forget about trying to keep up with the jonses and watch your wealth grow.The baby boomers will redifine retirement buy working until they die because most of them don’t have enough to retire.HA HA HA baby boomer showoff you loseHAHAHA

9. yums Says:
   October 13th, 2009 at 3:00 am

   read tips on investing and stocks that will help more on this site

10. umassbabe2002 Says:
    October 13th, 2009 at 3:00 am

    It’s best to diversify, but since you are young you can afford to ride out the ups and downs of the stock market. On the long run the stock market always tends to go up…

11. perk Says:
    October 13th, 2009 at 3:00 am

    mutual funds can be stock funds, bond funds, mix, etc…

    By stocks I’m assuming you mean buying shares of a company directly as opposed to in a fund.

    For the average person, funds are better. They are diversified and managed, you don’t have to do it.

    Since your in your 20’s go with stock funds. Don’t worry about the ups and downs, times on your side.

12. Dave Says:
    October 13th, 2009 at 3:00 am

    You’ve gotten some good answers. You can see there are a lot of different opinions on the subject. Here’s mine:

    When you start out, you are better off in a mutual fund that tracks one of the major indexes, like the S&P 500. That gives you instant diversity, which equals safety, with a small amount of money. And as someone already said, most managed mutual funds don’t beat the S&P over the long haul. Do some research, and find an index fund that will let you in for a small amount. Some have pretty high minimum investments. Look at the overall costs. You want a no-load fund, because you don’t want to pay commissions every time you buy shares.

    Set up some sort of automatic investment program, so you don’t have to decide to invest. This also has the advantage of what is called "dollar cost averaging". That means your money will buy more shares when the market is down, and fewer when it is up. When you’re doing it yourself, you can get discouraged when the market is in a slump, and fail to invest.

    I think you’re better off with a no-load mutual fund when you start off than with an ETF, because you can invest directly with the fund company, and not pay commissions or fees everytime.

    Start learning about stocks and mutual funds. Morningstar has some excellent free classes online (http://www.morningstar.com), and there are others, too. As you learn more, start to put some of your investments into common stocks. Over time, you’ll develop your own investing approach, and become more confident. Read some highly recommended books on stock investing. Those courses I mentioned will give you suggestions, but some of my personal favorites are by Peter Lynch, one mutual fund manager who DID consistently beat the market, Ben Graham, and Aswan Damordaran,

    Good luck. I wish I had started in my 20’s.

13. gregory_dittman Says:
    October 13th, 2009 at 3:00 am

    I would look into ETFs, which are baskets of stocks but there isn’t the internal buying and selling like with mutual funds. There are even more advantages to them.

14. Hoa N Says:
    October 13th, 2009 at 3:00 am

    Yes you could learn invest by yourself. it is your money, you should know how to do with it. for starter check this site out.

    http://www.pathtoinvesting.org/index_fla...
    http://www.stockcharts.com
    http://www.streettalklive.com>... university. a lot amount of information. It will serve you well
    I accumulate in good amount in 401k at the young age.I could share with you. when consider invest in stock market. you should consider basic 3 things:

    fundamental analysis==(economic data,finincial health, management, business model, competetion)>>what to buy

    technical analysis==(chart+indicator)>> when to buy

    Sentiment/schycho analysis==>>mood of investor, Contrarian point of view.
    Market cycle===>> check out book Trader Almanac by jeff hirsch will give you inside stuff
    When you combine 3 thing, It is one of the powerful knowledge goinh with you for the rest of your live

    At the age of 32. my 401k is amassed 73,000.00 and 30000.00 in taxble account. by follow simple rule

15. Frank Castle Says:
    October 13th, 2009 at 3:00 am

    It depends on your tolerance for risk.

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