What To Think About Before Investing In Stocks

Mutual Funds Or Individual Stocks

Investing in single stocks is not the only option for investors who seek this kind of exposure. Mutual funds also exist which act as a pool of securities designed to mitigate risk. A mutual fund may hold dozens or even hundreds of stocks, which can be part of a similar sector or completely different from one another. This way, if a single stock is doing very poorly on a certain trading day, the rest of the stocks in the fund doing better can help keep your average return up. If you buy a single stock and it does poorly, you are stuck with the results. Conversely, even if a stock does incredibly well, poorer performing stocks in a mutual fund may keep you from realizing big profits. Those who can spot individual stocks set for big growth can profit handsomely from it. Again, weighing risks is the key to making any financial decision.