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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Saturday, May 27, 2006

Buy Mutual Funds or Stocks

When you become more comfortable with your abilities as an investor you might want to try to see if you can bypass mutual funds and buy some of the stocks on your own.

Here are some ruiles of thumb in a diversified portfolio:
  1. Large-cap stocks: If you are ready, you should definitely try to buy large-cap stocks on your own. Large cap mutual funds do what many can do on their own. If you use a discount brokerage house you only fees will be to buy and sell these stocks. As we all know mutual funds have a lot of fees compared to this method. Pick at least 12 stocks in the different industry sectors.
  2. Mid-cap stocks: If you are very experienced and love doing your your own trading then try to do the mid-cap portion of your portfolio as well. Invest in at least 3 and go into different industry sectors. Be careful and make sure you are truly comfortable with this.
  3. Small-cap stocks: Small cap investing on your own is too difficult for almost all amateur investors. If you have the guts to do it try a couple companies on your own, but most of the time stick with a good small-cap mutual fund.
  4. International Stocks: It is too difficult to invest in international companies--please rely on professionals here. International stocks are too difficult to track and mutual fund will do the trick for this portion of your portfolio.
  5. High-quality bonds: U.S. Treasuries can be bought online easily through www.treasurydirect.gov. You can do this on your own and it is not terribly difficult.
  6. High-Yield bonds & Short Term bonds: For both of these it is best to rely on a bond fund. Research is difficult and unless you have advice from a professional it is difficult to do well here.

3 Comments:

  • At 6/13/2006 4:39 AM, Anonymous Rick J said…

    I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
    the indexes easily.

    Take a look at Wallstreetwinnersonline.com

    RickJ

     
  • At 6/13/2006 4:52 AM, Anonymous Rick J said…

    I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
    the indexes easily.

    Take a look at Wallstreetwinnersonline.com

    RickJ

     
  • At 6/18/2006 6:24 AM, Anonymous Rick J said…

    I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
    the indexes easily.

    Take a look at Wallstreetwinnersonline.com

    RickJ

     

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