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Investing Specialists

The Advantages of Owning Individual Stocks

Readers say greater control over portfolio composition, taxes, and dividends give stocks the edge over funds.

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Sometimes, it's easy to divide investors into two camps. There's the active-fund-management camp and the index-fund camp. There's the traditional mutual fund camp and the exchange-traded fund camp. And, of course, there's the fund camp and the individual-stock camp.

In all these cases, there's really no need to choose one side or the other--why not use both if it works for you?--but there are still those who feel that one way is better than the other. So, last week, when we asked readers on our Personal Finance discussion board whether they prefer investing in individual stocks or stock funds, many responded with well-reasoned explanations as to why they invest the way they do. The majority of respondents said that individual stocks make up a significant, or even a majority of, their portfolios and explained why. Others spoke up on behalf of a funds-only approach. Either way, readers provided some thought-provoking responses for anyone trying to decide which approach to take.

Adam Zoll does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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