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Select Securities: Should You Use Stocks and Bonds, or Funds

Diversification, Fees, Goals, and Structure All Matter

When you invest, one key decision is whether to use mutual funds or individual stocks and bonds. Mutual funds provide instant diversification and simplicity, but they also entail fees and management issues. Stocks provide direct ownership of companies you are interested in and bonds lock in returns through their maturity dates, but each security brings risks unique to the issuer.

The size of your asset pool is an important facet, but it is not the only one. Clearly, if one can afford only a couple stock positions, funds might be the best tool. Further, there are sectors in which even an extremely rich person might be better served with funds than individual stocks. Meanwhile, with bonds there are other issues independent of portfolio size that may make individual fixed income instruments more efficacious than funds.

How P3 Can Help

P3 helps you determine which security types will be the most effective for you. Informative, logically organized articles explain key features of all the major security types you will face. You will be warned of risks and other disadvantages of any particular vehicle, especially the many different types of funds.

Meanwhile, after accepting your information, P3 generates reports with suggestions for vehicle types that might make sense for you. In projections, P3 shows the expected path you are on currently and compares it to alternate paths based not merely on risk appropriate asset allocation but also on use of efficient securities. When improvements in expected performance are evident, you will know what to do.