Index funds or individual stocks?

The question people ask is "stocks or something safer?" — but that's the wrong axis. Over long horizons owning equities is the safe choice for building wealth, and cash is the risky one, since it will always lose to inflation. The real decision is how you own them.

Index funds or individual stocks?

For most people, most of the time, a broad low-cost index fund is the right default — and the evidence is blunt about why. 90% of actively managed US large-cap funds underperform the S&P 500. These are full-time professionals with research teams, and nine in ten still lost to the simple average over time. That is not an argument against owning stocks; the index is stocks. It's an argument that beating the market is genuinely hard, so the default should be to own it, but cheaply.

Then why does anyone pick individual stocks?

Because the index is an average, and an average can be beaten. But it is real work, and requires a disciplined process. Most who try underperform. Picking stocks well means reading company accounts, understanding where the money comes from, and having the gut to hold through the drops that shake everyone else out.

If you would like to be invested in stocks, but want to avoid the hefty fees that often come with funds, this portfolio might be something for you.

If you're just starting, how to start investing is the place to begin.