Should I Diversify Away From Mutual Funds?

In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who writes: "I've been slowly adding individual stocks to port, but I'm still heavily weighted in 401k mutual funds. Should I continue to buy stocks in order to diversify my portfolio?"

Jason and Brendan both believe that diversification is an important part of a successful investing strategy, and owning mutual funds makes sense for most investors. However, mutual funds aren't always the most optimal choice due to higher frictional costs owing to high turnover and load fees. Investing in individual stocks is a great option for investors with the time and inclination to follow them. For other investors, an index fund or perhaps an ETF tracking the S&P 500 can offer broad market exposure at a low cost.

Learn to Invest Like the Best
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2918246, ~/Articles/ArticleHandler.aspx, 9/18/2014 11:58:45 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement