Stop Investing In Individual Stocks, Use ETFs Or Mutual Funds Instead

Investing your money to make it grow for the future is a good idea. Picking individual stocks to do it isn’t. If you’re still in the habit of investing in the future by stock picking, there’s a better way.

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As personal finance writer Bob Lotich of SeedTime explains, individual company’s stocks can go up and down with the wind. Even most professionals can’t predict them well enough to beat the market. If you’re not even sure what “beat the market” means, much less how to do it, you’re better off sticking to ETFs or mutual funds:

Investing in individual stocks can be fun and rewarding, but it’s also messy. You have to research, purchase, track, and sell each stock in your portfolio. If you have dozens, it can be the equivalent of a part-time job.

You can avoid all of that hassle by investing in either mutual funds or exchange traded funds. Index funds are particularly attractive, since very few actively managed funds ever outperform the market.

This isn’t new advice, but it’s worth repeating until everyone gets it. Learning how individual stocks work is a great educational experience. If you want to learn about how the stock market works, we have a guide that can help you get started. At the end of the day, unless you’re willing to dedicate your career to the pursuit, you’re probably not going to beat the returns you can get with a simple ETF or mutual fund by picking individual stocks. You may as well save yourself the hassle.

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