should you invest in index funds or in stocks? index funds have definitely
become super fashionable recently mainly because it removes you as an investor
from the driver's seat and allows you to track the market without really knowing
much about investing. today I'm going to bring about an unpopular opinion and
show you the reasons why I personally invest in individual stocks as opposed
to index funds without sacrificing my time or risking more than I can afford
disclaimer I'm not a financial advisor and while I have studied and completed
my education for the certified financial planning or the CFP degree at NYU along
with the charted Market Technician among others I chose not to become a money
manager or register with a broker simply because as I was studying for
these things I realized that absolutely anyone and everyone should become their
own financial adviser and these topics should be mandatory at schools
unfortunately they're not and that's why I stepped in and I founded the INVEST
DIVA movement to help you take control of your financial future and make your money
work for you at your own terms without having to be at the mercy of a fund
manager that may or may not have your best interests at heart while investing
in an index fund is better than not investing at all and it could be a great
starting point for you, you may be missing out on some things and some of
them aren't even about money please watch till the end and if you think that
this makes sense give this video a thumbs up if you think that this doesn't
make sense I'm just being annoying you can go ahead and give it a thumbs down
we're going to queue in the intro and dive into stocks vs. index funds and the
four reasons why I personally avoid index funds and while we do that how do
we do the comment section and tell me where you are watching from let's go
hey guys I'm Kiana Danial three-time author and the founder of the invest
DIVA movement the march to jump high to take control of your financial future
and to make your money work for you index funds are all the rage these days
thanks to the Modern Portfolio theory which suggests that markets are
efficient and that a securities price includes all available information index
funds advocates all over the internet argue that active management of your
portfolio is useless and you would be better off simply buying an index and
going along for the ride and I'm here to say ah and look at some of the reasons
why it isn't always the best choice let's dive into the four reasons why I
prefer stocks to index funds reason number one is that with index funds you
won't have downside protection and some individual stocks actually way
outperform the index fund in the long run there's obviously no denying that
the stock market is can be very very volatile right investing in an index
fund like the ones that track the S&P 500 will give you an upside when the
markets are doing well but also leaves you completely vulnerable to the
downside you can choose to hedge your exposure to the index by shorting and
the index or buying a put it gains the index but because these moves are in the
exact opposite direction of each other using them together can defeat the whole
purpose of making money this is actually just a break-even strategy so you can
end up with no increased value at the end plus you probably would have to pay
commissions anyway on it with the stocks I can simply buy more as a price drops
given it's a good value stock and enjoy the profits later while being patient
and not panicking over each and every bump in the road when it comes to socks
patience is a profitable virtue reason number two you have no control over your
holdings in an index fund indexes are set portfolios if you buy an index
you have no control over individual holdings in your portfolio you may have
specific companies that you absolutely love and you want to own but there are
also companies that you probably had a bad experience with or you just don't
want to support them investing in an index fund is like buying those
wholesale surprise Christmas bag of toys that comes with like 30 different items
and you might find a couple of valuable stuff in them but most often or not the
rest of them are just crap also please keep in mind that by
investing in any company you are making a statement you are supporting that
company's political views social responsibility and morals personally
there are assets and companies that I would never invest in simply because I
feel strongly about how they impact the environment even commodities can fall
into this so just to give you an example and this is not about stocks but for me
oil is actually one of them I don't invest in oil or anything related to oil
being from Iran I know how much misery oil has created for the people in Iran
by giving the Iranian regime so much power and giving the other countries a
reason to bully and create all these wars in the Middle East
decide you didn't even buy oil when it dipped below zero this was just an
example and with an index fund you won't have the ability to say no to a single
doubt item reason number three is that individual stocks are too risky
is a myth this is the big one that people always get back at me about "Kiana,
isn't investing in stocks for risky?!" if you've ever heard the stories about how
somebody lost a bunch of money in the stock market you probably relate to this
so back when I first started on Wall Street I actually became a reporter at
the New York Stock Exchange on Wall Street and of course I was dying to dive
into the markets and start trading and investing it like I'm sure you might be
right now but since I was just learning I didn't have a much experience actually
investing or trading in the markets I was listening to everybody and all the
Guru's on the floor and following what they were doing I was supposedly
surrounded by the best investors out there who were trading app and floor of
the New York Stock Exchange right so I got confident and I went all in with my
fifteen thousand dollar account and I was super excited to guess
with this account and at that time $15,000 was a lot of money from me
but I was optimistic that what these investors and fund managers are telling
me is going to work out for me right well that actually didn't go too far I
kept following what everyone else was saying and followed the market but Kenny
guess what happened I lost the whole $15,000 yep I lost my entire savings now
it was so upset and disappointed in myself I'm in like how could I lose all
the money when I was just listening to the pie managers and to the people who
making millions in the markets right so just about that time someone called Guy
Spier who turns out to be in warren buffett's inner circle or something
reached out to me after he saw a video of me on LinkedIn and he's came to me and said
hey Kiana it looks like they have a ton of
potential but I think you're doing this wrong and I was like what do you mean
I'm just doing what everyone else is telling me to do and he said something
that changed my life forever he said that you've got to stop trading and you
have to start investing and some of you might not be thinking okay aren't
trading and investing the same thing and the answer is absolutely not so what I
was doing when I lost that $15,000 was training I was trying to make a quick
profit on the market's ups and downs which is always very high risk in the
stock market because guess what it is volatile right but here's a quick chart
to show you the differences between trading and investing trading is always
high risk because you're trying to guess and speculate whether the stock will go
up or down on a day to day basis in best saying well there is always risk
involved is typically lower risk because you're choosing investments that will
increase in the long term and remember that the market value increases 10 to 12
percent each year on average anyway intriguing is done with a short-term
goal in mind while investing is a long-term goal now when people often get
into trading they're hoping for a get-rich-quick method where they can
quit their job and go live on a beach somewhere which is why they end up
making very very risky trades and lose all of their money investing in the
other hand is intended to utilize the current
surplus of cash you have and use it to build that into more love the only
people that can actually make money by trading and managing this index funds
are the ones who put millions of dollars into the market and a glued to their
screen all day if you start small when trading chances are that you'll get
kicked out of the market just like I did that's it then you can make any money
but when you invest you can start with a little initial amount without risking
too much and slowly grow your portfolio and I have put together an awesome
master class to walk you through the exact steps that I take to invest in
individual stocks that I perform any index fund without being stuck to my
screen all day and even though I actually really suck at math so if you
haven't already open up a new browser and go to LEARN.INVESTDIVA.COM/YES
register you see from my free master class so that you can watch it after
this video let's get to reason number four of why I prefer individual stocks
to index funds and that is you won't be able to create investment strategies
based on your own unique financial situation your own unique risk tolerance
and your unique financial goals investing is very personal what works
for me may not work for you my ability to take a risk on my willingness to take
a risk is different than yours you probably aren't the same exact ages me
don't live in the same exact house in the same exact neighborhood with the
same exact husband and kids that would be weird right and that truly
is the reason why I chose not to become a money manager and to help people
create investment strategies that are unique to them with an index fund you
won't be able to do that you have to blindly follow whatever that index
tracks so while it could give you diversification it may not be optimal
for your needs and financial goals you need dividend-paying fixed income can
you wait out a growth phase of a promising value stock are you
approaching retirement and need more stability with an index fund you won't
get to have a say on any of that and I do all of us from my portfolio my
husband's portfolio and my dad's portfolio with only
one hour per week spending on strategy development and portfolio management
because once you get the fundamentals down it won't take it all that long to
monitor your very own customized portfolio that is not locked in a wealth
managers finds and consists of a ton of random stuff so you guys this was simply
my experience on my opinion on why stocks and investing in individual
stocks can be better for you in the long run than only investing in index funds
and if you are too scared of starting out investing in individual stocks or
other assets for that matter on your own I have put together this awesome master
class you guys you've got to register your seat for it if you haven't already
go ahead go to LEARN.INVESTDIVA.COM/YES
register your spot and I would love
to see in the chat box over there now before I let you go I'd love to hear
from you are you investing in index funds right now?
if you are what are some of your favorites and are you investing in
stocks right now and if you are what are some of your favorites head over to the
comments section and let the conversation begin I'm open to all of
your suggestions and ideas and questions and if you leave me a question I might
even answered in my next YouTube video go ahead and give this video a thumbs up
share it with your friends and don't forget to subscribe to this channel and
remember the only path to true wealth is by making your money work for you