Chapter 4. Selecting Your Own Stocks and Bonds

In This Chapter

  • Understanding the pros and cons of being your own investment manager

  • Exploring how to pick your own stocks and bonds

Investing in stocks and bonds via mutual funds is one of several ways to tap in to stocks and bonds. Some investors believe that they don't need mutual funds and that they should go and directly invest in their own stocks and bonds. However, doing so is often much riskier than relying on mutual funds. This chapter discusses why people choose their own stocks and bonds and what you need to do if you decide to do so.

Choosing Your Own Stocks and Bonds

According to numerous books, newsletters, Web sites, and articles, mutual funds are not the place to be. They're boring, conservative, and prone to mediocre returns. According to the pronouncements of these gurus, you can get rich quick by investing in these individual stocks.

Not only do these pundits say that investing in individual stocks provides Himalayan returns ...

"How we beat the stock market — and how you can, too. 23.4 percent annual return." — subtitle of The Beardstown Ladies' Common-Sense Investment Guide

Novices can ". . . nearly double the S&P 500 posting returns in excess of 20 percent per year . . . you might be able to fish out greater than 30 percent per year on your own without assuming considerably greater risk." — David and Tom Gardner, The Motley Fool Investment Guide

"Forget bonds . . . real estate . . . build a portfolio entirely of stocks. ...

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