This is the aim you ultimately seek. What is a comfortable retirement to you? For most, it involves some sense of freedom. Freedom to do what you want. Freedom from worrying about the uncertainty of tomorrow. In short, freedom to choose your own destiny.
With mutual funds, you cannot explicitly match your investment objectives with your investments. This stands out as the most critical advantage of individual securities. For example, if you have a payment of $10,000 in ten years, you can buy a U.S. Treasury with a face value of $10,000 that matures in ten years and rest in comfort knowing that payment will be taken care of. You can’t do that with mutual funds.
While you can easily grasp the difference between bonds and bond funds, seeing the difference between stocks and stock funds presents a challenge to those less aware of the intricacies of portfolio management.Recall the original reason people wanted to invest in mutual funds. They desired both professional management and felt they could better diversify through mutual funds. This worked as long as mutual fund portfolio managers maintained small portfolios.
You want to move forward and avoid moving too far backward. Avoiding losses, therefore, is more significant than beating the market. It’s easier to avoid losses with individual securities. In other words…“By investing directly in stocks and bonds, retirees may have the potential to earn higher returns compared to investing in investment products like mutual funds or ETFs,” says Polanco.
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