Picking Your Own Stocks
A lot of people like the idea of picking their own stocks because they have full control over their investments. However, it can be very risky for new investors. It’s completely down to you to assess a stock and determine whether it is a good investment or not. If you don’t get it right, you could lose a lot of money.
So, does that mean you shouldn’t pick your own stocks because there are too many risks involved? No, it doesn’t. But, you do need to spend some time learning about the stock market and how to pick stocks that are likely to give you a good return. Consider taking some stock market classes before you begin investing, so you can learn everything you need to know. Always keep on top of the financial press too, so you have a clear picture of what is going on.
When picking your own stocks, it’s important to diversify your portfolio to ensure that any losses are balanced by your gains elsewhere. Failing to diversify is the biggest mistake new investors make when they start picking their own stocks.
Investing In Funds
When you invest in a fund, you put your money into a pool with other inventors and the fund manager then invests in a number of different stocks on your behalf. You will then take out a cut of the profits.
The benefit of a fund is that you don’t have to do any of the hard work yourself. You have experienced investors choosing the stocks on your behalf, which is great if you are a beginner and you don’t feel confident choosing stocks. However, you don’t have control over the specific stocks that you are investing in. You can decide on what kind of fund to invest in, but not the specific stocks.
Which One Is Best?
There is no right answer here because it all depends on your own goals and experience. If you are a new investor and you don’t know much about the stock market, it may be better to invest in a fund to reduce the risks. Funds are also the best option for people that want a hands-off investment where somebody else does the hard work for you.
But if you want more control over your investments and you have taken the time to learn more about the stock market, you may decide to pick your own stocks.