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**JRixlcvF** · 04-23-2010, 07:01 AM

I do what you're doing, Mao. Most of my portfolio is in index funds, but there are a few investments that I make on the side in order to satisfy my curiosity about what strategies work in investing in individual stocks. YMMV, of course, but mostly I've learned that I'm a championship saver, but an average investor.

The good news is that you can approximate an enterprising investor by going 100% with index funds. Even though it doesn't have a discussion of index funds, The Intelligent Investor gives a lot of good advice that is applicable to the general market and thereby index funds. Chapters 8 and 20 are still must reads no matter whether you invest in individual stocks or index funds, though the concept of a margin of safety is a little less insightful when you're talking about index funds.

Another good piece of news is that you can go a little more exotic on the index funds than you can on individual stocks. F.e., you are young and you want to take on more risk by investing in China? You can do so reasonably through index funds, but it would be foolish for a retail investor in the US to invest in individual Chinese stocks. Another example is that if you want to take on more risk than the S&P 500, you can invest in index funds that focus on smaller companies. It would be difficult to invest reasonably in individual small companies.

04-23-2010, 07:01 AM	#4
JRixlcvF Join Date Oct 2005 Posts 505 Senior Member	I do what you're doing, Mao. Most of my portfolio is in index funds, but there are a few investments that I make on the side in order to satisfy my curiosity about what strategies work in investing in individual stocks. YMMV, of course, but mostly I've learned that I'm a championship saver, but an average investor. The good news is that you can approximate an enterprising investor by going 100% with index funds. Even though it doesn't have a discussion of index funds, The Intelligent Investor gives a lot of good advice that is applicable to the general market and thereby index funds. Chapters 8 and 20 are still must reads no matter whether you invest in individual stocks or index funds, though the concept of a margin of safety is a little less insightful when you're talking about index funds. Another good piece of news is that you can go a little more exotic on the index funds than you can on individual stocks. F.e., you are young and you want to take on more risk by investing in China? You can do so reasonably through index funds, but it would be foolish for a retail investor in the US to invest in individual Chinese stocks. Another example is that if you want to take on more risk than the S&P 500, you can invest in index funds that focus on smaller companies. It would be difficult to invest reasonably in individual small companies.
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