Which is Better: Picking your own stocks or using ETFs?

We hear this question often and the best answer is it depends. Here at Seabird Stocks, we use both. About 75% of our portfolio sits in our active investing fund which allows for us to pick our own stocks depending on our due diligence for each stock. The remaining 25% of our funds are put into no fee Exchange Traded Funds (ETFs). Utilizing both investment vehicles allows for greater diversification and less stress during tough economic times. 

As retail investors, picking stocks is in our blood. We choose individual stocks that we believe will beat the overall market’s growth. There is no denying that finding the right stocks to buy at the right time takes a lot of time and patience. With practice, we can improve our investing style to buy and sell stocks where we can make a profit. However, risk is also involved. If we invest in a stock that goes through a rough patch and our stop limit kicks in, we can easily lose money.  

Investing in ETFs as well as picking stocks can help reduce loss of capital in the case that a few of your selected stocks do not follow your predictions. ETF’s can be your stabilizer as the NASDAQ and Russell 2000 aren’t as volatile as individual stocks and will allow you to diversify your holdings. This means that even on a down day with your stock picks, you can see profits from your ETFs. Think of it as peace of mind and gives your money a way to grow without you having to manage all aspects of where it gets invested. Most ETFs nowadays do not carry a fee which should help convince you to place a part of your portfolio in them. 

Be Smart, Be Safe, and Trade!