Is it better to buy a stock in a company or a mutual fund stock as your first investment?

Question

I'm in college right now and I have money to spare. I'm going on the finance track and I want to get a jump start in investments because that is what I eventually want to do. I considered buying Citigroup and Disney among others. Citigroup is extremely cheap and as an international bank and them having raised some capital, the stock price should rebound rather nicely within 3-4 years. Disney, I was thinking because it's a recession proof company because even if money gets tight, families will go on vacations and even if American adults don't go to vacations, they will send their kids.

So here's my question: During hard economic times, is it better to buy a stock, in a specific sector and be limited to just one company of look for a mutual fund so you can get your feet wet while making decent money and your investment is diversified?

Answer 1

Mutual Fund, just make sure it is a no load fund.  No fees upfront.  Being in college you have enough to worry about. It takes time to research and follow the stock market.

Answer 2

Like you logic, and I agree with it, both companies look cheap at these prices, and both will be around for a very long period of time

BUT

Without having more information about your personal information, such as age, current income and other data such as risk tolerance, martial status, and demographics it would be very inappropriate for me or any other person to provide specific investment information in this type of media

However, there are websites that serve as tutorials for novice investors as well as information for the more experienced. Such sites are Smart Money - http://www.smartmoney.com/

Winning Investing - http://www.winninginvesting.com/  

There are other sites that will be of help MSN MONEY -(http://moneycentral.msn.com/home.asp) and Yahoo Finance (http://finance.yahoo.com/), Investors Hub  (http://www.investors.com/?tn=top), that provide access to various investment products as well as access to several experienced advisors, all provide a wealth of information regarding the market and the various products trade in the markets. The research and commentaries by the various writers provide a wealth of free information that serves all types of investors whether they be novices, or experienced professionals.

Don't rush in to invest, get a better feel for the market and the products that are out there.   Once you understand a little bit more, then you can make a decision that you feel comfortable with.

Mutual funds are professinally managed, and usually do decently in bad times and well in good times,  You can also buy funds in different sectors and that will give you diversity, and there's another product out there ETFs which when you visit MSN Money you will learn about.

I didn't answer your question directly, but I hope I gave you something to think about and places where you can learn

Good luck

Answer 3

get mutual fund - it is focus on a sector yet diversified.

Answer 4

It all depends on the individual. Mutual Funds are good for people who don't want to do their own work and wish for a team of people to pick a basket for them. The problem with mutual funds is, you will get mediocre returns from a basket of stocks and pay someone for the privilege of picking them for you.

Citigroup is in for a long recovery period after some rather rough times and questionable business decisions. They will be around and profitable for a long time, but the stock is not going anywhere soon.

Disney on the other hand is as close to a sure thing as there is in the market. It is a 5 star rated stock with a post Eisner management time that is second to none anywhere in the world. They have invested well for the future. Look for the stock to double in the next 4 years, soon should the market settle within the next two quarters. If you can get DIS below 30 you're in for some decent profits in the near term.

PS, this is my opinion and I do hold DIS stock. It's like gold. LOL

Answer 5

I like trading stocks.

$2,500.00 will get you a margin acc. at Scottrade.Then do ALOT of reading on the company you are interested in,before you buy.I have been daytrading CPST and QTWW for a few weeks now..doing great .Both move around .30 cents a day and with a couple thousand shares,you can do well.

I would stay away from Citigroup right now,no need to try to catch a falling knife.Disney is pretty safe but doesn't move much. Good luck to you

Answer 6

Index ETFs

Mutual funds generally charge higher fees and expenses and underperform the major indexes. If you don't need the money its best to invest in a broad based ETF (that follows all stocks on the Dow, NASDAQ, S&P). Its too difficult to diversify and pick stocks at 19.

Answer 7

Mutual fund or ETF.

Answer 8

If you are going to go into investments, then you will learn more from an individual stock. Your comments so far already indicate you have opinions and have analyzed some stocks. Never put more than 10% into any one company.

Normally I advise new investors to buy ETF's or Mutual funds.