What is better for the individual investors, stocks, bonds, or mutual funds?
Question:
Answer:
Stocks, bonds and mutual funds all have different risk / reward profiles. Each is suited to being put to work achieving different goals as part of a financial plan.
Stocks are suitable for investors with at least 15 years before they will need the money. Short term losses are to be expected. Constant research and market watching is necessary if you are going to own individual stocks.
Mutual funds, index funds, hedge funds and ETFs give investors with a long term time horizon opportunity to take part in the growth that stocks (bonds too) offer with professional management. There are timing systems for mutual funds and ETFs as well.
Bonds can be risky. The quality of the issuer is extremely important. It is entriely possible to have short term losses in a rising interest rate enviroment. Moody's and Standard and Poors offer bond rating services. Money market instruments are the "safest" investments available. Bonds and money market instruments are suitable tools for building plans achieving shorter term goals that do not have many years to ride out volatility.
Its up to you if you go online or use a broker. Talk with a few brokers and look at a few websites. Don't rush into anything. Good luck!
It depends on how much you have to invest along with other considerations, including how savvy you are about financial markets. In general, if you are a new investor, pick a good mutual fund (American Funds are a good family) and invest regularly. Another option is to buy an Exchange Traded Fund (ETF): this enables you to buy the NASDAQ 100 or the SP500 along with many other stock "groupings"
I recommend mutual funds because you can invest in stock and bonds in a deversified amount. A stock here, bond there, with different companies and you can see past growth from 10 years, 5 years, and yearly. Mutual funds give you much more information about various funds without have to pruse the newspapers for indexes. If your young, Go high risk because in the long run of your life, they pay higher dividends, if your within 8 years of retirement, think consersative. go for proven investments.
how much time to you have to do your investing? if you have loads of free time then you can research individual stocks and have a better chance with them. but keep in mind that professional fund managers have large staffs of researchers and yet they don't beat the index funds on average over time. so why try? i prefer ETF's which are a tradable variant of mutual funds. as to the mix of bonds vs. stocks, a lot of that depends on your age, years to retirement, goals, tolerance for risk and need for a steady fixed income flow.
i am strictly a do it yourself investor online. i was a broker at one point and i know to much to trust them.
More Questions & Answers...