Is it great to invest in stocks and an Index fund or just in Index Fund?
I am invested in YUM, GIS, GCC, KO, BIDU, VSS or Vanguard international smallcap ex us, EWC Canada Index and XOM. Have VASGX Vanguard Growth Life cycle Index fund. Is it better to be just invested in VASGX and not stocks? What is your view of the economy and when the next crash will come? Next bubble? I am 27 and make less than 20,000.
- 10 years agoFavorite Answer
Index funds or ETFs have one main advantage over buying stocks: diversification. When you buy stocks, you need to buy from different companies and spread your money across different sectors, to minimize risks. You also need to constantly research the companies you're invested in. But if you do all this, you should do better than in an index fund.
When an index fund makes sense is when you don't have the time or money to invest in common stocks. You need to spend hours, every week, reading about the markets and checking up on your companies to make sure they are still doing well. You also need enough money to invest in many different stocks at all times--I would say at least a few thousand dollars. But index funds and ETFs are already diversified. You don't have to buy as much, and just keeping up with general financial news is enough.
- RogueLv 610 years ago
I personally feel that individual stocks are very risky.
I do like Index funds, and also High Income funds with a percentage invested equal to your age.
So, if you are 27, I'd put 27 - 30% INTO hIGH iNCOME, THE BALANCE INTO Index