What yields a better return on investment -- funds or individual stocks?


"Individual stocks give you a better chance for a higher return since you have more control and can keep up with them easier than a fund with a basket of stocks."
-- Bill A., Montana

"If you are investing for the very long term the best bet is a quality index fund. The vast majority of actively managed funds under-perform the markets over the long term after fees are factored in. If you want higher returns and have the time and the discipline to do the necessary research and monitoring invest in individual stocks."
-- Larry E., North Carolina

"If you compare long term charts of stocks vs. mutual funds in the same sector the stocks are the winners because the fund is a mix of many stocks going up and down so it averages out the return. Stocks are the distinct winners for long term holds and also for trades, because you can catch the shorter term run ups."
-- Diana D., Florida

"Individual stocks definitely yield a better return on investment over funds. When is the last time you ever heard of someone becoming a millionaire in a few years by investing in mutual funds?"
-- Paul F., New Jersey

"Obviously, some individual stocks can yield a higher return than funds. They can also yield a much lower return than funds. Unless you have a diversified portfolio you have to be good and lucky to pick more winners than losers relative to what a good fund can do. Since I'm close to retirement I have greater concern than I did some years ago about minimizing the downside risk, and for that reason alone I'm into funds rather than individual stocks, though I am somewhat more aggressive about the types of funds I invest in."
-- Brian D.

More comments...

"It depends upon how much time and skill one has. Funds move slower and are more stable. Individual stocks are more volatile. The strategy I like the most is to pick a basket of stocks that one is comfortable with and create your own "mutual fund". If you do not have the time to spend on research then Mutual funds would be the better choice."
-- Gregg M., Illinois

"Picking good funds is every bit as important as picking good stocks. But, with the increase in diversification with funds comes a decrease in the overall rate of return. Therefore, stocks produce a higher rate of return."
-- Lou M., Pennsylvania

"It is totally dependant on how good you are as a stock picker."
-- Jim B., North Carolina

"I have invested in funds and/or specific sectors for over four years. My average return has been just over 18% per year, which has allowed my portfolio to grow quite nicely."
-- Karen M., Illinois

"As a position trader, stocks are definitely a better return on investment for me. I can make a profit in any market trading stocks and options. Funds are a more long-range strategy of investing. I want to be nimble, not in it for the long haul."
-- Nancy D., Tennessee

"I would say for most people a fund is the way to go. People will trade too much, usually when they shouldn't. The commissions and other fees do add up over time. Unless you have a lot of money and time, a fund is probably the best choice."
-- Ray M., Florida

"If you have a distant horizon and are looking for long term profitability, a good fund is the way to go!"
-- Gabe R., Michigan