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Home › Forums › Financial Markets/Economics › Why not go to cash? › svelte wrote:scaredyclassic

April 25, 2021 at 9:02 PM #821170
Coronita
Participant

[quote=svelte][quote=scaredyclassic]I have a question.
With trading fees zero, why buy a mutual fund?[/quote]

I guess that depends on whether you want to actively manage your mix of stocks. People who like to hold just a few companies will probably manage the trades on their own. That seems risky to me.

It seems safer to have my $$ spread over a wide range of stocks and have someone who has the time to watch that mix daily for patterns emerging in the market. I don’t have that kind of time. I check in on my accounts every couple of months. That leaves me exposed to major turns in the market.

Besides, most of my money is in my 401K. I can’t buy individual stocks there that I know of.[/quote]

Some 401k plans dont give you a self directed option. There’s a couple of actively managed funds i just like to keep around just in case, things like Fidelity Contrafund that comes in many 401ks.

Regarding index funds versus etf…I do bi+monthly contributions to index funds or sorts…while there are etf equivalents, one thing I found useful is not being able to sell right away and having some sort of penalty for frequently trading (ie being restricted to buy new shares X days from selling) has been good discipline for me on passive side of my portfolio. Having similar ETFs elsewhere, Im finding its much more tempting for me to try to time the markets in those accounts, and do more trading in and out off positions, which probably is a fruitless effort in the long term, at least for me.

Ive moved out of individual tech stocks, except 3. One, IBM, i simply bought for the dividend a few months ago. I dont expect a lot of hoopla on it, which is the point. About 2 months ago, i moved into visa and mastercard and some banks that were beaten down..because i figure given how much stimulus money is being thrown at people, people are going to end up spending $4 on credit for every $1 of stimulus they got, being good American consumers as they are, paying 19% APR, which probably will go higher on the not so far future…That, and costco will always be costco.