Stocks vs Funds for young investors

Do you think it's better to start out in stocks or funds when you're just beginning to invest?

Start with mutual funds.

It's no fun if you use your first $1000 to buy stocks and it completely disappears a few days later. If this happens, it might be a long time before you try again!

I suggest mutual funds because they are a diversified collection of stocks and do not depend on the health of any one company. Also, a mutual fund investment will get you involved in the process and allow you to learn from a relatively safe standpoint compared an individual stock. The more you are involved, the more you learn. Stocks may be appealing later on as you learn (and experience) your own risk tolerances and gain knowledge.

Good points. Another alternative would be ETFs. They are like the best of both worlds. You get the instant diversification of mutual funds, but you can trade them like stocks, and you don't have to have a minimum investment or have to deal with early redemption fees.

I just wish I would have heard this advice when I was first starting out. I compare my stock investments to my funds, and my funds are doing much better (especially in this bear market). We'll see how it turns out in the long run though.

You might consider ETF's. They are basically the same thing as mutual funds, except they have overall lower fees on average. And they are more liquid.

You could also consider a DRIP Plan. This ia a great way to purchase the best Blue Chip Stocks in the country and to take advantage of dollar cost averaging and free dividend reinvestment.