Do some people buy individual stocks plus their index funds?

[singletogether]

@ramy6et The strategy is called “index plus a few.” It scratches that itch to be the next Warren Buffet without the downside of concentration risk. I have primarily index funds, but will occasionally buy where I see asymmetric risk, with 100% downside, but 1000% upside. Keep it small enough that a loss isn’t impactful, but a gain is.

 

[poolchick3]

@ramy6et I buy individual stocks when I feel like an obvious opportunity lands in my lap. And I never actively look for these opportunities. This has worked out VERY well. Otherwise, I index.

 

[whiteknightnews]

@ramy6et “The most efficient portfolio is also the most boring”

Paraphrased from William Sharpe

 

[ramy6et]

@whiteknightnews And which is the most efficient portfolio?

 

[resjudicata]

@ramy6et Just a regular global index fund. Nothing else

 

[biggsandwedge]

@resjudicata A global index fund has not been optimal over the last ten years. Who’s to say if US-Only won’t be superior during our lifetimes.

 

[whiteknightnews]

@ramy6et Like someone else said, just a well diversified index or collection of indexes giving you exposure to the pertinent markets.

 

[rhandi]

@whiteknightnews

The most efficient portfolio is also the most boring

Exactly. I pick stocks instead of ETFs because I enjoy it and it's not boring.

 

[viendieutrinamdonga]

@ramy6et I own 3 single stock I bought 5 + years ago all of which much more than my index holdings. I got lucky but also put in the time and research. One of them is a ten bagger.

 

[blueberry25]

@ramy6et I mean I dont think its a problem to buy individual stocks as long as you treat it like gambling and use money you arent relying on. If those stocks happen to do well or poorly assuming you treated that as a side thing for "fun" and not part of your retirement strategy I think its fine to keep them.

I just wouldnt count them as part of your retirement savings.

 

[ramy6et]

@blueberry25 Thank you for your reply. I am responsible, measured, and strategic.

 

[blueberry25]

@ramy6et I mean thats fine. Its also fine to buy a lotto ticket as long as you arent fooling yourself about what you are doing and planning your retirement around it. Investing can be a hobby as well as a critical part of retirement...just dont mix the two and you are fine.

The risk is letting it go to your head and making most of your portfolio stock picks and relying on that money and growth to be able to retire comfortably. As long as you arent doing that then fine. Of course if you said you also bought Lucky 7 scratchers I would also say fine.

 

[samuelg29]

@ramy6et Wasn't there a study done in which monkeys out-performed professional stock pickers? Anyway, index funds are way easier and the key is to invest consistently over a long period of time. Depending on your age, bonds might not be a good fit as those are very conservative. I think bonds are good to have close to and in retirement, not as you're in the wealth building phase.

 

[ramy6et]

@samuelg29 If I am in my mid 40s, is it a good idea to have about 20% roughly in bonds, no more than that, just put away, don't touch it, and leave it alone, get that part done. Then focus on the other parts?

 

[noeasyday121]

@ramy6et It’s more dangerous to stock pick at 40 than 20. You have less time to make up for mistakes.

That said- investing in a lucky 7 blue chips is pretty far from day trading.

Most important is to get your money invested, so if that’s what scratches the itch, probably doing yourself a favor

 

[samuelg29]

@ramy6et I think that's largely a personal choice. If you feel more comfortable with that strategy then there's nothing wrong with it. Having the security of knowing that part of your portfolio isn't subject to big fluctuations could help you sleep better. Investing isn't just math - there's emotion and risk tolerance involved too.

 

[inmajorneedofhelp]

@ramy6et I have a few that I purchased when I was young before I realized it want the wisest move for me. But I never sold them. I did have the good fortune of buying some apple stock and that is the inky one that has done consistently well.

 

[ramy6et]

@inmajorneedofhelp I did sort of the same, I did it with Microsoft. Oh well, live and learn I guess.

 

[really]

@ramy6et As long as you keep in mind that that money should count towards your gambling budget, not your savings budget. If you can afford to lose and gambling gets you off then go for it!

 

[rhandi]

@ramy6et ETF's boring, stock picking exciting and enjoyable, no other reason for me.