In these days of bargain online trades, it can cost less to buy a portfolio of stocks than it can to buy many mutual funds. That's especially true if you're planning to buy two dozen or so large, steady companies and hold them for the next 20 years. You will pay the up-front trading costs and not spend another dime until you sell. Why pay a fund 1% per year (or more) in expenses to do the same thing?
In all fairness, plenty of large-company funds charge less than 1% per year. For example, Vanguard 500 Index VFINX costs just 0.18% annually. That's a measly $180 on a $100,000 investment. But if you had invested that extra money in large caps instead of giving it to the fund to buy and hold large-cap stocks for you, over 10 years, compounding at a 10% rate per year, you could have earned more than $4,000, depending on how much you paid to buy your dozen stocks in the first place.
If you have the resources, consider assembling a collection of two dozen or so stable, leading companies that represent a variety of industries to form the core part of your portfolio, with a plan to hold on to these names for years to come. You'll likely save on fund-management fees and, if you've put together a diversified portfolio of the largest U.S. companies, get marketlike results.
You can then invest the remainder of your assets in mutual funds that invest in smaller companies, foreign stocks, and other styles that aren't represented within your core stock holdings.
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