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Can Everything You Need To Know About Money Possibly Fit On A 3x5 Index Card? - Money Rule #4

Can Everything You Need To Know About Money Possibly Fit On A 3x5 Index Card? - Money Rule #4

July 31, 2021
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Money Rule #4 - Never Buy or Sell Individual Stocks (aka-“The person on the other side of the table knows more than you do about their business”)

This rule would seem to fly in the face of the current rise of online discount brokerage platforms. But hear me out - buying individual securities can mean you are putting too many eggs in one basket. "You're not Warren Buffett," Olen and Pollack emphasize — and chances are, you're not going to become him, so don't invest in individual stocks and try to beat the market.

"Don't get us wrong. People do hit the occasional home run," they say. "Yet studies suggest that less than 1% of us have the ability to consistently and regularly beat the Street ... Not only will individual stock picking NOT lead you to beat the market, but it will likely leave you behind — possibly way behind."

Especially if you have limited funds to invest, think of it this way – one share of Walt Disney Co. (NYSE:DIS) is around $117 as of 6/12/2021. If the mouse dies, your total investment could disappear. Low cost Exchange Traded Funds (ETFs) are also available on most, if not all, of those online platforms and can help diversify your holdings and minimize the chance that one company's stock will massively impact the value of your portfolio.

 (Inspired by: “The Index Card: Why Personal Finance Doesn’t Have To Be Complicated” by Helaine Olen and Harold Pollack; Random House, 2016)