Key insights
- The post discusses the merits of investing in individual equities versus broad index funds like VTSAX, VTBLX, and VTIAX, particularly with smaller investment amounts. It questions whether the potential upside of individual stocks justifies the higher risk and effort compared to the diversification offered by index funds. The author suggests that larger investments in individual stocks might be more worthwhile for high-net-worth individuals, but for smaller investors, focusing on index funds or increasing income to invest in indexes may be a more prudent approach. This reflects a slightly bearish sentiment towards individual stock picking for retail investors with limited capital.
Like if you’re gonna toss $500 at a few stocks when they’re down (few thousand total), if you did individual equities while they’re down, maybe you’re up 25-50% after a year or two, but obviously it can keep going down, even to 0, since they’re individual companies.
Why not toss the few $K at the funds I mentioned in the allocation you decided best?
I was thinking if you’re gonna do individual equities, it may make more sense to do larger plays like $10K or more if you’re higher NW or super high income, cause then the upswings can actually change your life and stocks can only go to $0 (unlike options…yikes). And then you sell the winners and put them back in the large indexes.
Honestly it may just be less work to get a second job and toss that income into the indexes tho….
Thoughts on this subject?