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Author: TwoCybers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: do I want mutual funds? Date: 1/20/2011 12:41 PM
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There is no free lunch. With very few exceptions, higher returns mean higher risk. A great many people held the idea bank stocks were conservative, high dividend paying investments i.e. great for widows and orphans. As you may have noticed, many banks have gone broke and any bank that took TARP money was forced to reduce or eliminate their dividends.

Generally a mutual fund is designed to reduce risk by investing in several companies. Some funds invest in several banks to continue with that sector. Some funds invest in a singe country or region. Some investment very broadly with the idea of returning the average of all stocks.

During the last 24 months it has required effort not to obtain good returns. The S&P 500 is up 58% plus what ever the dividends have been. So have your 10 stocks done better than 60%? If not, you have failed to equal the market and done so with greater risk. (Consider if one of you stocks had tanked.)

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