Hi all! I've been learning the Way of the Mustache for a few months. I graduated college in 2012 so I've been working full time for about fifteen months. I'm torn about where to put my investments for 2014, and was hoping you might be able to give me some advice. Here's the situation:
- I'm maxing out my 401k and a Roth IRA, so let's call that good to go for the purpose of this post.
- Beyond that, I have about $6000 in a personal account in the Vanguard 500 index fund (VFINX).
- Let's say I have about $1000 a month to put into personal investments, starting now.
I've been thinking about getting into stock trading using a discount online broker (tradeking.com), but I'm torn about it - there are of course a lot of deeply conflicting opinions online, including:
- Indexes are great, but stocks are the ticket to real wealth!
- It's okay to put 5-10% of your portfolio in individual stocks you've thoroughly researched.
- Having individual stocks is useless unless you can choose five companies with the skill of Warren Buffett or choose thirty across different industries.
- If you're investing between $500 and $10,000, it's a toss up between indexes and individual stocks. Above $10,000, go with stocks.
- I suspect that MMM himself would say something along the lines of "Don't do it! Stock picking is no better than going to the casino! Stick with indexes, ALWAYS." (especially judging by his Pig's Feet characterization in this post:
http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market)
If you were in my shoes, would you:
- Buy some individual stocks! It'll be fun. Choose some market leaders that (some people think) will perform in 2014 and long term, like AAPL or FSLR.
- Buy some stocks, but don't bother with the market leaders: the index funds already have them en masse. Instead use individual stock trading as a place to find a relatively unknown company and gamble on its growth potential.
- Don't buy stocks. Pour it all into indexes. (Also, when I have $10,000, I can switch to VFIAX or VTSAX, which cuts my expense ratio from 0.17% to 0.05%.)
Obviously the debate between stock picking, managed funds, and index funds is as old as Bogle's thesis, but I was hoping you guys might be able to give some thoughts based on my particular situation.