Stocks vs. Mutual Funds - Which are safer? Which make better investments?
From Facebook and if, you're watching from YouTube hi I'm Kelly from freebie fighting mom comm and, today. We're going to chat all it's a topic that I've gotten some questions about this past week see, sorry, about that there. We go so. We're talking about a topic that I've got some questions about this past week in regards, to investing. Whether. Or not stocks, versus. Mutual, funds are safer investment and which. Would be right for you in your portfolio, so. Without. Further ado I'm gonna jump into Heidi's question here and Heidi was. The one that said basically. She said her husband, received a, bonus they, want to use that in by, investing, with that money but they aren't sure all the way if you're just joining us please, give, this video a like and if you will comment where you're viewing from or leave, any money questions, that you have I would appreciate it. So Heidi's, question was basically. Her husband is getting a bonus she wants to know what to do with that bonus so, she says should they pick mutual funds or should she pick stocks, to invest that money in well. Um if you don't know my, background is in investments, in money management so that's probably why I got this question and so, you're welcome to ask any of these type of questions or quite. Honestly anything, about budgeting, or finances, or saving, money anything, like that feel free to leave your questions in the comments and if, you're watching this on replay you can still leave your questions in the comments I always come back and check the videos usually. At least once a day and to make sure that I didn't miss anybody's questions. So. Like I said Heidi, wants to know she's got some extra money from her husband's bonus what should she do with that money so. Um so. To answer your question Heidi. Briefly. Whether or not mutual funds are safer. Than stocks. Yes. Mutual funds in general. Are safer. Than stocks and I have to say in general because it always depends, on the fun that you're talking about it depends on the stock that you're talking about so having, said that if, you, just, the very general, question of whether or not mutual funds are safer yes they're typically safer, the reason they are typically safer, is because, you they're more diversified. Basically. What a mutual fund is is you're buying into multiple, companies okay, whereas, when you buy a stock you are buying just that one. So, that's why by, diversifying, and buying multiple, companies you, are.
Diversifying, Your money it should be safer, because, let's say for instance one of the companies, that you buy into, let's, say you buy a stock let's say you buy Procter. Gamble and that. Stock isn't performing very well well that's if you put all your money into that one stock and your stocks not going to do very well then your money so I could do very well either if you buy a mutual fund, that say, has Procter, & Gamble and in it saved a large cat fund if you buy that mutual fund that. Means that stock cart your gamble is probably one of maybe. 20 funds or, 20 stocks so, you. Are less likely to I, guess your money's less likely to go down if some of the other stocks, in the mutual fund have gone up or, done fairly well so. Long, story short mutual, funds are typically, safer, investments, than stocks depends. On the stock to has the mutual fund of course but typically they are safer, because of, diversification, because, you are not. Just putting on your money into one company with a mutual fund you are putting your money into multiple companies so, you have more chances, to kind. Of minimize your risks because you're not putting all your eggs in one basket basically. Basically. What a mutual fund is so, if Suman you don't underst. Maybe, you do but, as, far as Heidi, asked the question a mutual fund is being actively managed, by a manager that's why you pay a fee so, what, it's what, they should be doing for you is picking the best stocks, it, for, that mutual fund so you shouldn't have to do, all the research yourself so some, would say mutual funds can also be more convenient than, a stock is for that reason as well. I. Just, took some notes down here it's why I keep looking down. So. I. Would. Say if you're new to the market especially two or if you like. Mutual funds for that reason - I would I hesitate, to encourage you to invest in stocks unless, you have a lot of cash so, that you can buy a variety, of different stocks because, it's much harder to diversify, your money by just buying, a few you're not diversifying, the money we just buy a few stocks so. Heidi. If your husband's got a bonus, I would probably recommend mutual, funds if you're saying now what you look like I. Would, say look at someone you're better and fun families, so my favorite my favorite is probably my. Favorite mutual fund families probably Vanguard, and I, would say because they typically have lower fees that, is something you need to be cognizant, up when you're looking at a mutual fund is what. Is their management fees what are you gonna pay out because. If the fees are, on, the higher side remember, that eats into how much you're going to make so. If you have let's say you're looking at two different maybe. Two or three different mutual funds and their performance, has been fairly. Even fairly similar. Be. Very cognizant, of what you're paying out in fees because, your fees are what you're gonna have to pay out before you get any of your return back so, pay attention to what the, fee structure is because that eats into how much you're getting. Having. Said that with, with mutual, funds I like, I said I like being guard a lot another. Good fun family is fidelity they typically. Have good performance mutual, funds I would, also look at like tier oh Christ can have good funds. American. Funds some, of their funds can, be good I used to own some American funds in. Fact I pulled a money magazine article, this is the most recent money magazine. Semester. I think it was the most recent issue I got a couple weeks ago it's kind of gross looking because I took it to the gym yesterday it has lots of sweat on it but more information you need probably but, in. Here was a really good breakdown. Of some of the biggest mutual, funds and as. Far as these which they broke it out by category, large-cap, mid-cap small, cap and then international imbalance and basically, what they did in here is they said some of your most popular mutual. Funds and make. Some of the larger funds that you would probably be investing, in and, overwhelmingly. In almost every category you're going to see Vanguard, pop up they're going to see fidelity, pop up and American. Friends showed up a few times as well it's here oh Christ shows up a few times so, not surprisingly, those are some of the larger fund families, their fees are usually pretty competitive and their performance is usually pretty good so. I, would start there when you do your research when. Doing mutual fund research I would look at things like morningstar.com. Actually, is a good place to go for mutual. Fund research if. You are, relying, on a, investment. Advisor to, help you with your mutual funds or, with your investing in general whether, it's at a bank or at a brokerage house or.
Or. Whatever financial credit you know whatever financial institution, you're going through I would, make sure that I ask them how are they getting paid and the, reason I say that is because they. Could be incentivized, to. Recommend. Certain funds to, you or, certain fund families to you. For instance they could work in the branch where they'll say they're running a promotion on American, funds like if you sell X, amount of dollars I'm into, an American Funds they'll get a certain, kickback so. Just. Make sure when you wouldn't hire anybody, to help me at your money make, sure that you understand. How they are getting paid on your money and so. Be. Blunt. About it I mean, it's your money so and you're paying them out of fees so make sure you say are you paid on assets under management so are you paid just for how much I give you are you, paid for my performance so if my portfolio, does well you get a certain percentage I understand. Are you paid if you recommend is a certain mutual fund to me, make. Sure you ask that specifically, because I'm, assuming they're gonna recommend the, right thing for you because it is the right thing for you but. Not. Always is, that the case so make sure that you understand. How. They get paid and I. Would. Feel confident, if I if they say to me I'm, getting paid the same amount whether I recommend, the American fun music. Fund to you or if I rent and recommend a Vanguard fund or if I recommend, zero. Price or whoever. To you I'll get paid the same amount that. Would make me feel good because I would like to know that there's no incentive for them to recommend, a particular fun, family, or a particular fund, over, any other one, so. Just make sure you understand how you're. Paying them and how. They get compensated basically. So. That Heidi that was my answer for you yes they're safer, if you want to know how to research mutual funds go to places like Morningstar, com you can send me a message if you have some specifically, you want me to look at I'd have to look at them for you my. Favorite family, to the ones I mentioned really, I reply start with Vanguard I really like Vanguard mutual, funds we own, one at, least one of theirs I think so, maybe, two I think at least one, so. I like Vanguard so there's, my question for you that's my answer for you Heidi and. I. Took. A bunch of notes I think I already touched on everything.
Guaranteed. Sector, funds another, thing you can look at if you're looking for investment, options if you're. Thinking gosh I don't know if I want to do I, really, don't know if I want to be mutual funds but don't leave out any stocks is in too risky consider. It exchange to exchange, traded. Funds or ETFs. Ecstatically. What they do is they near an index so say for instance you, want to buy an ETF, for, mid-cap. Say, you know what Kelly I don't know how to research these things I really, want to do my own trading, which by the way I recommend if you have if, you, have any inkling that you might want to do your own trading but, you're not really sure let. Me know down here if that's something you want to see a video on and like how to execute, a trade by yourself on a platform, like for instance I use, what, was Scottrade I guess I got bought out by TD, Ameritrade, it's. Not as hard as you think like I think people think oh I need, to go to a bank to do this or I need to go hire a financial, advisor, um not. Know you don't um it depends on how how, engaged you want to be in the process but. It's not as as, intimidating as what you might think and it's more user friendly probably. Than what you realize. Especially. Now the platform is so easy I mean most of times you're just toggling, buy sell, the quantity, and in the ticker which the ticker is just basically the symbol for either stock of a mutual fund or the ETF so, let me know if that's something you want to see like how to do your own trades it's not hard I assure. You if, you're like Kelly I don't know how to pick a mutual fund I don't know how to pick, a stock I just. Really want to mirror what the market does or what a market index does I say okay well then you combine exchange-traded, funds like an in ETF and. What. That's gonna do like if you buy say an SMP, exchange you're fine that's just gonna mirror with the S&P does that's gonna keep you wherever the market is I, like. Etf source pain trading funds not, necessarily, for buying like an S&P, index. Fund. I like them for sectors like say for instance oh, if. Somebody says you need to invest in biotech or something like that or somebody says you need to invest in natural, gas or something and or, precious metals and you don't want to buy a specific fund. Dedicated. To, that because you're like how do I know which one to pick or you don't want to buy into certain companies how, do you know how to research something. So niche like that so. I like ETS. For that reason so. I have used them when I'm buying things like a mid-cap you've midcab, basically. Not, assuming, you don't know but you may very well know like, mid-cap is just that like it's you're investing, in companies, that are mid capitalization. Sighs so, when Simon says it's a large cap fund or, a mid-cap, fund or, small cap fund all, they're saying is it is investing, in that size of company it's a large cat, fine it's going to invest in large companies. There's are much larger companies, and say I'm a small cat fund. So. I like ETFs, for things like niche, like a mid cap where, maybe I wouldn't I wouldn't know which stocks essa' silly to pick it take a long time to research which specific, mid cap stocks I wanted to invest in I. Like it for sectors. Like I say like in biotech, or something really niche like that where it would just take so much time to research them but, you still want some exposure in your portfolio, ETFs. Can be a great way and they typically can have low, fees they, can be a great ways also add some diversification, into your portfolio so um, and those, you can do on platforms, by yourself too you don't have to go to a financial advisor if you feel like you need to because you're just really overwhelmed, by it that's different but, if you feel like hey I'm silly idea like I know, kind of which mutual funds are what type of mutual funds I won or a type of exchange traded funds I want I encourage. To consider. Doing your own invested you can save quite a bit of money doing that like I think a mirror. Trades, fun, I think I think it's like seven dollars or eight or something like that it's pretty inexpensive um. Whereas. If you go to a advisor, you're obviously gonna pay quite. A bit more, for. Their services, but. Okay. So I addressed that and, dress ETS and then I want to touch on Jenny's. Question, here Jenny this past week you know kind of piggyback in the conversation, we had last Friday as far as if.
It's Your money or if it's a husband's money or whoever manage the money or works. Outside the home or whatnot Jenny, said that, her husband, considers. The money he brings it it's his money and then. I, basically feel, liking her not able to feel like she can spend anything or anything any money because it's his money he brings it into the house and all she all she all she does is a stay-at-home mom which hello. That's like the most important, job ever, but. Um but. I I know there are people who feel this way um men. Too who feel like I, bring. Em the money so it must be mine or something um, Jenny. I'm, sorry that that is her situation and I have a friend I think I mentioned it last week who. Husband. Feels kind of similar and so. That unfortunately you're not alone and I think there's if you read that all the comments on the question that I posted for you Jenny I think you'll see that, other. People mentioned that they had that experience too I can. Just try to say that try to appeal to him let him know if you, were not doing this job if you were not raising the family if you were not raising the kids that you'd have to hire somebody so, you are bringing in value in at the family so, um, that's. I would just try to appeal to him that way and I'm sorry that that's your situation but. No like I say read those comments and and. You'll, see that unfortunately, it's, more, common than what you realize I think. And. Then she not brought up a question this, past week about mortgage. Rates, and getting the best mortgage rate and I. Kind, of liken it to buying a car and the fact that like I shop around when we did when, we bought this house than when we refined in the past I've treated, the same way you shop around for rates and what. I'll tell you is is and we have some great comments for this question as well thank you everybody for commenting, on Sheena's question but, the, best thing you can do is make, sure that, you are pricing, out your competitors and you can start with credit unions and, I. Have, had we've had luck, with cred music years, ago where that was our first that's, where we financed house the first time but. I, will. Say getting, shop, around for rates but don't just be fixing it on the Wraiths though make. Sure that you look at the whole package of what it's going to cost to get that mortgage, or to refi. Make. Sure you look at not just the rate but your closing costs and things like that the total package because, some people they may let you you know give you a phenomenal rate that their closing costs are going to be absurd, so, make sure that you shop around and compare them, against each other and lets them know that you're doing that sometimes, that can incentivize them, to want to if they want the business bad enough they may actually change, their rate in order to get your business so. If you're getting, four. And a quarter here and you're getting you know you. Know for a quarter here and four and a half here that the guy over here know what four and a half I got a four and quarter already over here, and. Your closing cost may be better which you may, be considered, doing for a quarter and then keeping your closing cost the same so, try, to use them to, try. To use each other to negotiate, to get a better overall. Deal. So not just the rate with the rate and the closing cost or something that you really want to look at. So, with that being said we, chatted about our mutual funds i wouldnt make sure we touched on that check out the latest money article, for some of the best mutual. Funds in each category if you want to know what they list is some of the better funds and each kind of war and you don't have a copy of the latest money magazine, leave. A comment or message me I'll be happy to let you know which. Ones they recommend, in. But. Again like if you do any sort of research for, the category, you're looking for I would, say you'll some of these names will pop up because they're popular and they're some of the best performers, um I. Would, also say, be. Aware of the fact that um, yeah. They're also in some of us performers. So. Yeah make sure you do reset ended and look, on Morningstar comm and if. You're if you're wondering, where do I start with mutual funds like should I buy a small cap should I buy a large cap it, depends, on how much money you have that you want to it that you can invest right now I mean, in general I would probably say start with like a large cat growth if you have a long time for a retirement. But. And then as you get more you know funds available, to do more investing then you can't branch out to maybe I want to do a small. Cat this time, maybe I went to a mid-cap, or maybe by a balanced. Fund balanced. Funds can be just that they can have equities, and sometimes they got a fixed income in them too and fixed income is just bonds so. Let. Me know if you guys have more questions about those specifically, or about your specific.
Question I'd, be happy to address it because this is the kind of stuff I could talk all day about but. I don't know more for, you because I understand, that not everybody loves loves, his stuff as much as I do probably. So. I address. Jenny. And then Sheena and then I wanted to give a highlight to today's, Kroger free Friday download, if you shop at any Kroger affiliate, stores just today's, download, is that bottle, of horn hydration, so be sure to click on that coupon. Today and you have a couple weeks I think to to. Actually get. That freebie so. That was that and then also if you will do me a favor and, if you get a chance head, over to youtube and follow me on youtube because i'm putting out videos every, week now so, what i just put out this past week is a homemade. Face. Moisturizer, recipe, and i. Really. Love it actually it, is so so super simple to use and to. Make and, quite, honestly if you don't already use essential, oils I encourage. You to look into them and I've mentioned them before but they are a great way to make, all-natural products, not just beauty but also household, cleaner products, that, um, that. For, so much cheaper than what you would buy in stores so check. Out my face moisturizer video it just went up this past week over there on YouTube also, this next, week I will get that credit video out I take your credit the video over, a week ago now about how to improve your credit score and doing. A final edits for that that will be out like. I say that will be out this week it should be out up on YouTube so head on over to youtube click. Subscribe hi. Oh hi click. Subscribe hey, safety hope you're doing well and. Be. Sure to follow be. Sure to follow me on YouTube over there and then, the other thing I want to mention is if you're not already following us on Instagram go, ahead and head on over to Instagram, and it's. Kind of Instagram is a fun place right now because we're sharing a lot of behind-the-scenes kind. Of things, of what we're doing. It's more the way to treat Instagram is more of a personal platform, so we go if you share I share more personal, videos and that sort of things over there so follow, on Instagram, if that's of interest to you so. I hope that we addressed your questions, today Heidi Jenny and Sheena and keep your questions coming in as far as your money questions whether it's about saving money or budgeting, or money management keep.
Emailing, Me if you want or leaving. Comments here on the video works great too and. Without. Further adieu I hope you have a wonderful weekend, and thank you so much for tuning in.