Individual Stocks

Individual stocks investments refer to investing in shares of individual companies, rather than mutual funds. While some say investing in mutual funds allows for a greater diversification of investments, individual stock investments provide greater control over your personal portfolio and involve lower fees. With individual stocks, no taxes are incurred unless you sell, or invest in a dividend paying stock. Buying and selling stock could be costly, depending on brokerage fees.

Diversity in your stock portfolio will never guarantee your investments are safe. However, it is a good idea to invest in multiple companies in different industries and sectors, as somewhat of a safety net, though it is not guaranteed protection from loss. For instance, investing in technology, health care, and financials keeps you more diverse than investing in various industries that are related. Though the risk of loss is always an issue, if one industry fails, it’s possible the others you have invested in will remain steady.

Individual stocks investments will require you to keep a constant eye on your portfolio. It is possible to split your investments, using some of your money to invest in individual stocks, and some of your money to invest in mutual funds, in hopes of strengthening the return on your investment. What you invest in depends highly on the amount of money you have to invest. No financial situation is the same from one person to another.