Do you make more yearly returns from a brokerage account or by investing in mutual funds?

Question

Do you make more yearly returns from a brokerage account or by investing in mutual funds?

Answer 1

The truth is, you cannot answer that question.  A good broker should be able to outperform most mutual funds.  Mutual funds have a disadvantage of having too much money under management, which restricts what they can buy and sell.  Further, most funds do not short stocks or purchase options.  How you should invest depends largely on your risk tolerance.  If you do not tolerate risk well, buy yourself an index fund and contribute regularly.  Index funds outperform most other mutual funds over the long term.  If you can stomach more risk, find a good broker with a proven track record and let him/her make you some money.

Good Luck!

Answer 2

Mutual funds of proven records are the best under the circumstances.As Buffet says fear when others are greedy, invest when others fear. Make your judgement.

Answer 3

This is an unanswerable question.  Ther are good brokers and there are poor brokers.  There are good mutual funds and there are poor mutual funds.  

One of the disadvantages of mutual funds is that they must distribute realized capital gains annually.  That is a big disadvantage.  On the other hand I have a friend who has a broker managed account and he had to file a 6 page capital gains schedule for the year last year. Sort of makes me think he might have been better off with a few mutual funds.  

Answer 4

It depends on which you've invested in.

BTW:  A brokerage account can have Mutual Funds....... they will "earn" or "lose" an equal amount (assuming it' the same fund).

The only difference may be a small transaction charge ranging from $10.00 to $50.00 (from the broker.... however companies like Schwab Fidelity & TDAmeritrade have many funds without a transaction charge.

Read:

Mutual Funds For Dummies