Hi All!
Here are few more reasons why people pick their own stocks:
1. You can control you own taxes. There is nothing worse than buying a mutual fund right before a distribution!
2. You can easily monitor your portfolio of stocks and understand why each stock has gone up and down. To understand why SP500 went up 2% on a particular day is a bit more challenging.
3. You can sell your stocks while the market is open. If you purchase an index mutual fund you get the market close price. The exception is if you purchase an ETF (exchange traded fund) which tracks an index. In this case you can sell anytime market is open.
4. No management fees to maintain your portfolio. The average annual management fee for a mutual fund (non-index) is something like 1.35%. The annual management fee for an index mutual fund (like one based on SP500) can be as low as 0.17%. Note that commissions for buying and selling individual stocks can easily cost more than annual management fees for mutual funds.
5. And last but not least, you can talk to your friends about your winning stock picks during lunch.
Vince.
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