Ind. stocks vs. index funds: pros & cons. Seeking advice


So…I pulled the plug. I sold out of all 10 positions. I looked at my returns YTD, and while I was a little ahead of the S&P500, I was behind VTSAX by almost a full point. Then I looked at my returns over the last year, and I was getting crushed by VTSAX. So of the ~$19K, $5000 will be going to my savings account as an emergency fund since that was my one glaring omission as a follower of the PF community, and the rest will go into VTSAX as a taxable account, and I’ll contribute $350/mo. to that account for now.


I applaud your decision. Not only are you more likely to come out ahead this way, but it will be a lot easier. No more microdecision making. With individual stocks, you are constantly evaluating whether to buy, sell, or hold. That’s no way to live.



Why not buy Dividend ETFs? They give you much better diversification at decreased ER (your brokerage will have commission free ETFs / Mutual Funds to buy).

For example, look at DGRO and HDV. Both are BlackRock iShares Dividend funds. The fund that pays out higher dividends (a little more than 3%) has significantly less appreciation than the fund that only pays out around 2%. Remember that the more dividend stocks you purchase, the lower your overall returns will be. It’s much easier for a small / mid size company to double their stock price than a much larger company like Verizon.


Thank you, @PoF

@David, I’ll take a look at those funds. Thanks for the suggestions.


This is nice discussion for those investors who are confused between Ind. stocks vs. index funds: pros & cons. I think I would like to go with index funds. However you may also know how to invest in SIP or lumpsum.
Whenever you are going to invest in mutual fund please look the portfolio of company and fund manager and also the fund performance.