Home » MONEY FORUMS » Investing » I honestly am still confused about stocks. In my mind, they are just something that people on Wallstreet deal with. Do average people (not in finance) typically deal with stocks, and if so in what way?
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Posted by Hannah Tishkoff (MONEY FORUMS: 5, Answers: 1)
Asked on November 16, 2015 1:28 pm
I agree with Beth. If you are just starting out with investing, you probably don't need to be concerned with individual stocks, or even most mutual funds (there are actually more mutual funds than there are individual stocks).
As a rule of thumb you should develop an investing strategy that centers around a few low cost ETFs or low-cost mutual funds, and a few low cost bond funds. As you learn more about portfolio management, you may find that you want to hold a few stocks for a specific reason. It's easy to buy stocks as an individual consumer, but it may never be a critical part of your asset management strategy.
Hannah, most people who "own" stock own them indirectly as part of a mutual fund. If you only understand one thing about stocks, you probably don't need to invest in anything more complicated than a broad, index-based mutual fund. These are funds that buy a broad base of stocks, mimicking one of the stock indices. You will earn the average market return over time, and pay minimal management fees (these funds have REALLY low management fees) and minimize capital gains taxes you have to pay.