My brother and I differ. I prefer stocks as I see potential for greater profit. While my brother believes in mutual funds for safer but smaller growth.

Which do y'all prefer and why? Thanks

Saw a piece recently by BlackRock that studied I think the last 5 or 10 years and of those about 97% of all equity mutual funds had positive returns, while only about 55% of all individual equities did. Something like that pretty close anyway. That being said I allocate about 15-20% in individuals for the reasons you cite.

Retirement accounts, mutual funds are the obvious choice.

Taxable accounts, ETFs are probably wiser but I have a little money for individual stocks.

There are no surefire bets on individual stocks, and I don't think you can go wrong with a total market/S&P index fund.

100% depends on the goal. Retirement im not as risky as others. I diversify my other accounts to a mutual fund, appl, and a few k to play with on like draft kings or something more risky. I've been saving up for a house and a good chunk of it is invested, but the closer it gets, the safer I go

I'd say you're a fool to turn this into roulette and only play red or black.

99% of people investing dont pay attention to their accounts day to day. That is they don't; they can't; don't have the time; etc. and this is a good thing actually! In that sense ETFs and MFs are 100% the best solution for them.

Then there's people that like the market and want to be somewhat active in making their investment decisions. Of these people the vast vast vast majority that choose individual stocks and/or trade in and out and try to time the market will fail and underperform a simple portfolio of ETFs or MFs.

Individual stocks are much more fun. And short term the casual investor may do better than simply being in a fund. That's when they end up losing more because they think it's easy and end up taking more risk.

I say all this not to say individual stocks are bad. I love them, I think they definitely have a place in a persons investment portfolio. I come from it as looking at the masses of people investing their own money long term they will not outperform a portfolio of funds

I started with a 50/50 mix with one half in three mutual funds and the other half being an even distribution of 10-15 stocks. Both have out performed the SPY over the same time period. However the mutual funds have returned about 8% more than the individual stock portfolio.

https://texags.com/forums/57/topics/3109164

Every knee shall bow and every tongue shall confess

Clsk making waves again. Someone mentioned it a while back and now it's had a couple of good days.

OverSeas AG said:

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I will probably never touch mutual funds again, when I can get the same if not better returns, same risk and less costs with an ETF.

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You like the <5-10 bp fee etfs better than the >60/70/100 bp funds too?

tamu2017 said:

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My brother and I differ. I prefer stocks as I see potential for greater profit. While my brother believes in mutual funds for safer but smaller growth.

Which do y'all prefer and why? Thanks

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Your question is weird because mutual funds/etfs are just diversified baskets of individual stocks, so you can't just make a blanket statement about greater returns without specifying which individual stocks over what time frames.

Any company can fail at any time. Sears used to be Amazon. GE used to be Tesla. Bear Stearns used to be PayPal.

OverSeas AG said:

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I will probably never touch mutual funds again, when I can get the same if not better returns, same risk and less costs with an ETF.

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I'm gonna say ETFs are actually a little less risk. Being able to GTFO mid-day was a massive benefit on days like we had back in March.

I was 100% Mutual Funds till the age of 50. I'm now 100% stocks (I'm 63). I study like crazy, I'm following my stocks probably 15 times a day, and though I've always been a buy and hold individual, Covid has taught me to get out or in quickly. I've been very fortunate, as I consistently beat the S&P 500. I'm now in the process of getting out of my growth stocks and putting those dollars into safer, more conservative areas.

If one has the time and talent, one can do very well with individual stocks. There is a ton of free research on many of the brokerage sites, be it ETrade, Schwab, Fidelity, etc..

I built my own beta ETF made up of about 70 dividend growth companies. I reinvest the dividends and insert new capital only into companies that are undervalued. It's a long term investing approach with the goal of generating a solid passive income stream. There are always great companies on sale, it just takes a little time and research to find them. This ensures I am not buying overvalued shares. A mutual fund or ETF is always buying overvalued companies. But if an investor doesn't have the time, then an index fund would work great with simple dollar cost averaging. That's what my work 401k does. That money gets pumped into FXAIX (Fidelity 500 Index).

Some of the companies I own include: KO, PEP, MO, MCD, MSFT, PG, CL, CLX, ABBV, JNJ, O, T, VZ, PM, AFL, BNS, BMY, CVX, ED, DUK, EV, EMR, FRT, KMB, MMM, TGT, SO, SON, NUE, WBA, etc.

Thank you!

SeanG512 said:

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I built my own beta ETF made up of about 70 dividend growth companies. I reinvest the dividends and insert new capital only into companies that are undervalued. It's a long term investing approach with the goal of generating a solid passive income stream. There are always great companies on sale, it just takes a little time and research to find them. This ensures I am not buying overvalued shares. A mutual fund or ETF is always buying overvalued companies. But if an investor doesn't have the time, then an index fund would work great with simple dollar cost averaging. That's what my work 401k does. That money gets pumped into FXAIX (Fidelity 500 Index).

Some of the companies I own include: KO, PEP, MO, MCD, MSFT, PG, CL, CLX, ABBV, JNJ, O, T, VZ, PM, AFL, BNS, BMY, CVX, ED, DUK, EV, EMR, FRT, KMB, MMM, TGT, SO, SON, NUE, WBA, etc.

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That seems, well, not true.

My apologies......always buying some over valued companies.

Take the S&P 500 for example.....surely there are a few companies right now in the S&P that are overvalued, right? You wouldn't say all of them are undervalued. If I bought shares in an S&P 500 Index fund, I would be essentially be buying some shares in those overvalued companies.

SeanG512 said:

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My apologies......always buying some over valued companies.

Take the S&P 500 for example.....surely there are a few companies right now in the S&P that are overvalued, right? You wouldn't say all of them are undervalued. If I bought shares in an S&P 500 Index fund, I would be essentially be buying some shares in those overvalued companies.

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The whole point is... nobody knows what those are for 1,3, 5, 10 years down the road.

Some are extremely overvalued, but history tells us even more are likely extremely undervalued. There's 500 so you catch some dogs, but even more rocket ships.

So you are speaking only to passively managed, index based mutual funds/ETFs?

I know they aren't as popular as the low cost, index based, strategies but there are a ton of actively managed mutual funds with value based strategies.