21 year old recent college grad, heading back for grad school next year in accounting. I have about 2500 i'd like to invest but am a little hesitant. With that small amount of money, is it worth it to try and diversify a stock portfolio, or just choose 1? Are mutual funds a better option? Any advice for just starting out would be greatly appreciated.
I am also starting grad school in the fall (Law) and I find DRIPS to be a very good option for someone our age. I have a portfolio of 10 stocks that I hold for long term savings and then I also have a roth IRA and a drip plan as well. Its never good to put all of your eggs in one basket, but the overall answer depends on how long you are going to hold the securities. I myself am more of a stock than a mutual fund guy.
After a bit more research I'm seriously considering investing in ETF's. Does it make sense to choose just one of these with my small amount of moeny, as they are inherently diverse? My time horizon for this investment is probably around 4-5 years, as I will not need this money anytime soon.
ETFs could be a very good option for the reason that you mention. I use them in my roth. I think with $2500 you could still diversify. I like the vanguard family of index funds and I try to diversify between S&P index, small cap, emerging market, and REIT. I favor funds that merely track an index rather than being managed as these tend to outperform in the long run with smaller fees. Definitely do your own DD
try researching bonds... you may find a good one to get you a decent return
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