Buy individual stocks or mutual funds?

[wildcat]

OK sorry for all of the open surverys among the ER people. I am just curious as to how people prefer to invest: 1) individual stocks 2) mutual funds 3) both or 4) to hell with stocks I only buy real estate and if you could give a quick reason why.

[BUM]

wildcat,

All of the above.

Funds are #1 for me with a few individual stocks to spice things up (most recent play was MRK). However real estate is always of interest in a down or sideways market. Why you ask? Because its a limited commodity. God isn't making any more of it.

BUM

[unclemick]

Heh,heh,heh - I've bought all four at some time or another in my checkered investing past - plus timberland, 10% interest in a non-working gold mine, a few gold and platinum coins. Always seemed like a good idea - at the time.

Never stocked up on freeze dryed food though.

Still have dribs and drabs of the above - but what counts is: 85% index funds and 15% individual stocks.

I don't count coins, timberland, the fish camp we live in, the mine toward ER - they might have some marginal scrap value someday.

[cute fuzzy bunny]

I finally gave up on the individual stocks, although I used to hold both those and funds. Too much aggravation at tax time, along with extra work for not enough benefit IMO.

[REWahoo]

Primarily mutual funds, particularly the low expense balanced variety. They got me here (FI and 60 days to retirement) and I plan on sticking with them. I'm gonna dance with who brung me.

REW

[preben]

Mostly index funds and ETFs:
VTI+IJJ/BRSIX/EFA+VTRIX/EEM/VNQ+PCL/PCRIX/VGPMX/TIP/PFUIX/PEBIX

10% in each block. Cheers!

[Spanky]

All mutual funds + Ibonds. I tend to avoid individual stocks because of the volatility.

[eleighj]

Primarily mutual funds, particularly the low expense balanced variety. *They got me here (FI and 60 days to retirement) and I plan on sticking with them. *I'm gonna dance with who brung me.

REW

REW

Exactly what balanced funds do you own?

eleighj

[Eagle43]

I believe in Vanguard Index Funds. The big money is there, 40% equities, 60% bonds.

I also have I-Bonds, EE-Bonds, and a few E-Bonds. Some cash also, which needs to be invested somewhere. I should probably buy some CDs, and I had never heard of the Pentagon Federal Credit Union before getting on this forum. Will probably go that way with the extra cash.

[unclemick]

Heh, heh, heh

Let's trash mutual funds. We had some fun with Bernstein's - 15 Stock Diversification Myth a while back and Intercst had an article on REHP about the effects of management fees a while back.

Second cup of coffee and my no. 2 pencil this morning says if I canned all my mutual fund managers and bought my own stocks - I can up my retirement budget an easy $200/month.

Now the accumulation saving phase is a different critter than distribution(I'm 11 going into 12 yrs of ER). Lots and lots of pros and cons either way.

All stock is I suspect a distinct minority group - like real estate only.

Today at 61 - 75% Vanguard Lifestrategy, 10% Vanguard REIT Index and 15% individual dividend stocks. Thinking hard about gradually phasing out Vanguard and getting to all stocks - by age 85.

Unclemick, one of the things that makes your posts so
interesting is that we can't tell when you are kidding.
Remember to add smiley faces

JG

[unclemick]

Actually I'm serious.

Thinking of going to Vanguard Target Retirement Series(mixed to get a Ben Grahamesque 50/50); let Vanguard computers slide the asset mix while I age; do some partial Roth conversions along the way(watching my tax bracket); building up dividend stock stream.

Notice I'm damping volitility with Vanguard while upping it witth dividend stocks.

Crazy huh?

Where are the 100% stock lurkers - now that we need them Heh, heh - a case can be made - more than one way to skin a cat.

[wildcat]

I am very much into individual stocks (not quite 100%) but I am young so I guess I don't apply. What does everyone do for the income side of their retirement other than pension/SS? Do people rely on dividend checks or bonds or what? Thanks.

[brewer12345]

I am primarily in individual stocks. However, I only really have enough of a competitive advantage in certain sectors (primarily small caps and financials). Since I need other asset class exposures, I have started adding funds for exposure in those areas. Accordingly, about 20% of my portfolio is in international equity funds and about 9% of my portfolio is in a commodity fund. Over time, I plan on upping my exposure to international equities a bit, adding an allocation of unhedged foreign bonds, and I will be adding more USD fixed income.

For fixed income, I mostly use CDs, since they seem to offer the most yield at the lowest risk. I also tend to favor dividend paying stocks and MLPs in my taxable account.

Both MFs and stocks.
MFs for capital appreciation so intermediate to long term hold.
Dividend paying stocks for income - same timeframe as above.
Non dividend paying stocks for capital appreciation, fun and 'thrill of the ride' gambling - short to intermediate hold. This would be about 5 - 7% of total portfolio.

[charlie]

Unclemick's approach of 100% dividend paying stocks
is no crazier than JG's 100% fixed income. Both
plan on living off of the distributions and never selling.
Am I right guys?

Both strategies are vulnerable to unexpected events that may force selling at the wrong time. Like runaway inflation in JG's case or a health crisis in unclemick's
case .... if I remember correctly he is going naked on
health insurance and LTC insurance.

When I ER'd in '89 I plunged into individual stocks
in my IRA and DRP stocks, like unclemick, in my
after tax account ..... hook, line and sinker. It took
about 10 years to convince me that mutual funds
were the right way for me in my IRA .... but I only
reluctantly sold the last of my DRPs last month.

JG and unclemick, I wish both of you the best of luck!
But seriously, I wish both of you would consider some
insurance .... like TIPs in JG's case and literally in
unclemick's.

Cheers,

Charlie i

[Nords]

Where are the 100% stock lurkers - now that we need them??? Heh, heh - a case can be made - more than one way to skin a cat.

Oh, we're still here, but I think this topic has been beaten into the ground by other threads.

There are almost as many roads to ER as there are travelers, and I haven't noticed anyone posting "Sorry, my plan didn't work, I'm starting at Wal-Mart next Monday".

It's interesting to note Buffett feels that most investors should put their money into index funds.

[Eagle43]

It's interesting to note Buffett feels that most investors should put their money into index funds.

That he does, and he convinced me. Investments warrant cautious thinking, not pie-in-the-sky wishful hoping (like what happened in late 1990s). I know I cannot beat the market, and therefore, I don't even try. Further, index funds' low costs usually ensure that they outperform "brilliant" fund managers with high fund expenses in the long run.

[Hyperborea]

There are almost as many roads to ER as there are travelers, and I haven't noticed anyone posting "Sorry, my plan didn't work, I'm starting at Wal-Mart next Monday".

Yup, I haven't noticed anybody posting that they didn't time the market correctly either. *Everybody who posts that they time the market claims that they went to cash sometime between January and March 2000. *Of course that's not the same thing as all those who market time were in cash then. *Only those who "win" are posting about their success market timing or their ER strategy. *What we've got here is selction bias.

[wildcat]

I never hear much from real estate people. You mean nobody on here is from the Carlton Sheets school of real estate?