The ultimate questions which the newbies in investing field ask everyone who have a long investing career.
The answer to the question is of course yes. The answer is yes as long as you are patient enough and if you are comfortable leaving your money invested for at least five years.
Why Five years you might ask. The answer to this is that it is pretty relatively rare for the stock market to experience a downturn that lasts longer than that. And if you have invested in good companies, who does a good job at creating good money habits and products will make their stocks will eventually go up. Which for you it means that you will make a pretty okay return on them.
However if you don’t know anything about investing and what makes an investor to an intelligent investor I would recommend to invest in mutual funds than individual stocks. And when you gain more experience with investing in mutual funds and you have learned a few things about investing then feel free to also invest in individual stocks.
The reason behind this statement is because with mutual funds you can buy a large selection of stocks within one transaction. This means that you will have somehow a good idea about what stocks are doing okay and what stocks are not doing okay.
It is important to mention that it is much easier to create a diversified portfolio with funds than it is with stocks. This is because when you buy funds you buy multiple individual stocks in one transaction. But create a diversified portfolio with stocks isn’t much harder to create it than with funds.
Yes it takes much more time, effort and money to create diversified portfolio with stocks. The reason behind is because create diversified portfolio with stocks takes a lot of research, depending on your knowledge, it takes a more money to buy more stocks and knowledge on how to manage a portfolio. When you choose stock mutual funds, the people behind them are doing the work for you.