The average investor will get better returns on a total-market index fund than betting on individual stocks. The returns of many individual stocks are tempting, but timing the market to get those returns is very unlikely. "Time in the market beats timing the market", as they say.
For the average person who doesn't intend to make trading their vocation, I would always encourage them to look at a total market index, and maybe some smaller indexes, like high-growth tech or emerging markets. If you're getting part of your paycheck in company stock, that's plenty of risk you're assuming already.
(i.e., Investing in stable dividend stocks (e.g, IBM, Coca-Cola, etc.) and holding them for long periods of time like 3-5 years, and protecting your principal from big losses with a STOP order)
It sounds like a lower-risk strategy to me! If you have the knowledge and experience (and excellent luck), I think investing in individual stocks can be lucrative. However for most people (including a lot of career traders) you see better, more stable returns on an index!
It makes sense to have a certain small % of your portfolio as more high-risk and high-reward investments. And this % depends on your risk profile. You can get one here using my quiz.
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The average investor will get better returns on a total-market index fund than betting on individual stocks. The returns of many individual stocks are tempting, but timing the market to get those returns is very unlikely. "Time in the market beats timing the market", as they say.
For the average person who doesn't intend to make trading their vocation, I would always encourage them to look at a total market index, and maybe some smaller indexes, like high-growth tech or emerging markets. If you're getting part of your paycheck in company stock, that's plenty of risk you're assuming already.
What do you think about value investors?
(i.e., Investing in stable dividend stocks (e.g, IBM, Coca-Cola, etc.) and holding them for long periods of time like 3-5 years, and protecting your principal from big losses with a STOP order)
It sounds like a lower-risk strategy to me! If you have the knowledge and experience (and excellent luck), I think investing in individual stocks can be lucrative. However for most people (including a lot of career traders) you see better, more stable returns on an index!
It makes sense to have a certain small % of your portfolio as more high-risk and high-reward investments. And this % depends on your risk profile. You can get one here using my quiz.