When you decide to invest in the market, stay away from individual stocks. You never know when something terrible will come out about any one company, no matter how good it looks now. And you don’t know when speculators will make a bear raid on a company.
Its much smarter to look at segments of the market, especially segments that are out of favor now, but will have to come back, and buy either mutual funds or Exchange Traded Funds (ETFs). That way you are diversified and aren’t dependent one the performance of one company. If you want mutual funds, check out Vanguard, low expense ratios and high ethical standards – what a great combination.
I am not interested in mutual funds, its a rare one that can beat the benchmark un-managed index funds. I prefer the low expense ETFs and own several, including IYW, its a high tech ETF that tracks such firms as Google…… It doesn’t move up or down as rapidly as the individual stocks, but that is ok by me.
The two big advantages of ETFs is that most have a low expense ratio and new ones are coming on the market every week, Slicing and dicing the market up in a million ways. There is even an ETF that mimics Wal-Mart’s major suppliers – WSI. But I would stay away, you know how Wal-Mart squesez its suppliers for lower prices.
Do a LOT of research before buying anything, especially the super-duper ETFs which claim to double or triple the up or down movement of a sector. They are a little complicated, but once you know how they work, they make excellent hedges to protect your nest egg.
And go to a website called MarketRiders, which helps people compare high-expense mutual funds with similar low-expense ETFs. You will also get a free education on how ETFs work.
