Mutual funds have a large degree of diversity built into them. Hard to achieve through buying individual stocks. But mutual funds alone are not completely diversified either. Each fund usually concentrates on a particular strategy (low to high risk, small to large caps, industries, etc). At Bridge's age, she can get away with more risk than someone who is about ready to retire. I tend to like well established funds...they have a nice history of success.
All true. Then there's the factor of a person's risk tolerance level - whatever their age. If being in a higher risk investment is going to keep you awake at night, stick to the well established funds IMHO.
Most of us are too caught up in the emotion of it. We get scared and yank our money. It's the old adage: Buy low - sell high. When markets drop, smart investors get in there and pick up shares at a reduced cost. It takes a lot of patience and a certain level of fearlessness.
I worked for that firm in '87 - when the markets tanked. Clients were going crazy and I was cursed at like it was my fault! I was only the assistant!
When the markets recovered a lot of people breathed a sigh of relief and yanked their money rather than go through that again.
As wild a ride as tech is, it still suits me better than being an investment advisor.
