5 Signs You're Ready to Graduate From Index Funds to Hand-Picking Stocks
Index funds are a great investment. They track financial indexes, such as the S&P 500, and they make it easy for beginners to build a diversified portfolio while reducing the risk of big losses. They're such a good choice that Warren Buffett, one of the greatest investors of all time, recommends most people make them their primary investment.
But index funds are also limiting. While there are many available, all you can do is pick from among them; you don't have direct control over what specific companies your money is invested in. And index funds generally won't outperform the market. They aren't designed to, since they invest your money in lots of different companies.
If you want to invest in a specific business or take a chance on beating average market returns, you'll have to venture beyond buying funds alone. Before you do that, though, watch for these five signs you're ready to make this big financial move.
Source Fool.com
