Top 5 Women's Mistakes in Personal Finance Management
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How to decide whether to buy stocks or mutual funds

Stocks are securities in which you can invest a lot of money for the long term. But the question arises: buy individual shares or buy securities through mutual funds? The factors below will help you decide.
Steps
1
Ask yourself if you have time to study stocks. If you have the opportunity to spend time and energy to analyze the securities market, apply it to the study of individual stocks and monitor your assets for an extended period of time – choose individual stocks. But if you do not have time or desire to do this, buy shares of a mutual fund; it may be that the best option for you would be passive investing in a series of index funds.
2
Calculate distribution costs. How many transactions a year do you make? What is the average size of your transaction? You can buy individual stocks for less than $ 10 apiece through a discount broker. Mutual funds, on the other hand, have three main costs: a premium to the market price of a share (the amount applied when buying or selling a mutual fund), an annual expense ratio (a percentage of the total amount of your investment), and a sales tax (gap between prices, brokerage commissions and capital gains that are given to mutual fund managers when transferring a portfolio of securities to mutual fund investors). Sales taxes are hidden costs; they are estimated at approximately 1.24% of assets from 100% of each value added tax. [1] For example, if you invest $ 100,000 in a mutual fund with 5% initial costs, 1% of the expense ratio, and having a 100% annual turnover, you will pay $ 5,000 as initial costs by investing only $ 95,000 in the fund, and the expense ratio and taxes the turnover will cost you $ 2128 a year, but you will not notice this, since this money will automatically be deducted from the value of the net assets of the mutual fund. Since taxes are deducted from the interest of your assets when owning a mutual fund, the more you invest, the more profitable it will be to invest in individual stocks. On the other hand, if you frequently conclude transactions and pay brokerage commissions from percent of your capital, which are significantly higher than the annual expense ratio paid in a mutual fund, it may be more profitable for you to invest in mutual funds.
3
Calculate how much you need to invest. In total, in order to achieve sufficient diversification, you will have to invest approximately the same amount of money in at least ten different securities. To pay a commission to a discount broker who charges $ 3 per trade, you will need $ 30.
If you invest less than $ 500, do not consider mutual or index funds with down payments as an option. Choose from among those with the lowest expense ratio and lowest turnover taxes. For example, having invested a total stock of $ 500 in a fund by a market index without initial expenses, with an expense ratio of 0.18% and an annual turnover of 4.5%, you only have to pay $ 1.18 per year in taxes (calculated as follows : (0.0124 * 0.045 + 0.0018) * $ 500), i.e. $ 11.80 for ten years. Undoubtedly, this amount is much less than what you would have to pay as a commission when buying individual stocks.
If you invest more than $ 10,000, it is possible that individual stocks will suit you better. The low stock price index mentioned above will still cost you $ 23.58 a year, and $ 235.80 for ten years, well above the $ 30 you would pay as a commission to create a diversified portfolio of ten individual stocks.
If the amount of your deposit varies between 500-10000 dollars – toss a coin to choose between individual stocks and mutual funds; make a choice based on your preferences.
four
Determine how much you want to control your investment. If you prefer to monitor how stocks are managed when they are bought and sold, make a choice in favor of individual stocks. If you want to transfer the right to buy, sell and make decisions to a professional investment manager – choose mutual funds.

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