Individual Stocks vs Index Funds : Lessons I have Learned
sagarwadhwa.substack.com
Usually, there are two more common ways to invest in the stock market by yourself (among others): Buying individual stocks like Tesla, Google, Facebook etc. or buying low cost Index Funds which invest money in plenty of these individual stocks. For example, a common index fund is based on the S&P 500 index which comprises of top 500 companies in the US. You could buy a $100 worth of Google stock or you could buy an index fund with $100 to get exposure to all the stocks in that index. Investing in index funds is more of a boring approach while investing in individual stocks can be more exciting. It’s not only the case that the movements in individual stocks prices are relatively higher which makes them more exciting. There is also potential thrill involved in getting things right, finding undervalued stocks which rise up and give you huge returns. If you get it right, it can make you ultra rich like this person:
I feel exactly the same way!