3 Signs You're Ready to Hand-Pick Stocks

Many investors rely on index funds to build their portfolios, and for good reason. The beauty of index funds is that they take the guesswork out of investing. Rather than have to thoroughly research companies, you can instead rely on the performance of broad market indexes, like the S&P 500, to deliver results.

Index funds definitely have their limitations, though. For one thing, their goal is to match the performance of the benchmarks they're tied to, not beat it. An S&P 500 index fund, for example, will aim to do as well as the S&P 500 itself. But if you want to outperform that index, you'll need to choose specific stocks to buy.

Also, with index funds, you get no say in how your money is invested. If there are specific S&P 500 companies you're not a fan of but you buy S&P 500 index funds, you're stuck owning them, even if indirectly.

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Source Fool.com