Should I buy stocks in individual firms or only index funds?
Simple answer: - Never buy stocks in individual firms unless you can prove you have a worthwhile, legal stock-picking advantage over professional fund managers (99% of people can't). Invest via a low-cost retirement (super) fund or if buying outside super, use Vanguard index funds. But the Barefoot Investor said I can: In the Barefoot Investor book Scott says: "If you want some advice on which stocks to buy, you have two choices: head over to asx.com.au, where you can search for a ‘full-service broker' — that is, someone who'll recommend stocks. Alternatively (blatant plug alert), you can join our Barefoot Blueprint investment newsletter." - Scott's advice here is wrong. Over 90% of professional stock pickers fail to beat the market after all costs over periods longer than 10 years. That includes the Barefoot Blueprint, which Scott Pape has now shut down. - For amateur stock pickers more than 95% will fail to beat the market over periods longer tha