Should you invest in stocks or mutual funds? This is a common question for those just starting with investing. There are advantages and risks with both options, so it’s important to research each choice carefully before making a decision. In today’s post, AOG Wealth Management, your professional wealth management advisor, discusses the benefits and risks associated with each of these investment options.
Stocks vs. Mutual Funds
When you buy a stock, you are essentially buying part of a company. If the company does well, so do you. However, if the company goes through a rough patch, your investment could drop in value.
Mutual funds give you a way to invest in stocks, bonds, or cash alternatives. A mutual fund is essentially a basket of stocks and bonds pooled together with the money of other investors. Mutual funds bring more diversification than investing in a single or a few stocks, meaning they can be less risky based on having a more diversified basket of stocks that comprise the fund. For this reason, mutual funds are often preferred by people who are relatively new to investing and want less risk.
Risk-Reward and Research
Stocks can be riskier than mutual funds, and a skilled investment management advisor can help you put together a balanced, well-diversified portfolio of stocks with a risk/reward ratio that is suitable for your investment goals. The biggest advantage of a mutual fund is that it provides immediate diversification. If one stock in your mutual fund falls in value, the overall fund will not necessarily suffer since there are many other stocks in the fund.
The best way to decide whether stocks or mutual funds are right for you is to consult with an experienced wealth management advisor. AOG Wealth offers professional wealth management services. We’ll help put together an investment strategy that is suitable to you and your investment goals. Give us a call at (866) 9933-0203 for more information on our services. We are professional wealth management advisors serving clients throughout Northern, VA and Washington, DC.
The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation.