Are mutual funds good to invest in? or is it better just to pick a selection of stocks and hold them?

By investing in a mutual fund, you are relying on someone with (presumably) far greater knowledge than yours to pick the right grouping of stocks to give you the best return. Buying individual stocks is more risky.

You can research mutual funds, including their 1,2,5,10 year rate of return at www.morningstar.com

Good luck. If you are young, start investing every penny you can spare. You will thank yourself in 10 years when you have a nest egg working for you while everyone else is just thinking "hmm.. maybe I should start thinking about my future.."

Yes, and it depends on your knowledge of the stock market.

As the mutual funds are designed by investment companies to buy shares in different stocks and other securities, the mutual fund investor along with their ownership of shares of the mutual fund, have a restricted claim to ownership on few of the securities held by the mutual fund. Besides mutual funds provide the dual advantages of diversification and professional money management services to manage the money invested in the fund.

Shareholders can buy more shares or sell the shares they own whenever they wish. But these transactions should be carried out carefully since the prices of the shares vary daily and can significantly affect your profits.

It is rare for an individual to pick a bundle of stocks which over time outperform a balanced portfolio of mutual funds.

Funds invest in a broad range of stocks and other instruments, adjusting their holdings according to market conditions. Most individual investors do not have the time or knowledge to do this effectively. Far too many individuals invest in stocks emotionally, waiting too long to buy or sell, resulting in poor investment returns.

The vast majority of individual investors should be in a balanced portfolio of index funds. These automatically adjust to given indexes, without any emotion involved. These funds over the long term ALWAYS outperform individual stock picks.

Go to http://www.vanguard.com http://www.fidelity.com or http://www.fool.com to learn more about investing in index funds.

When buying funds, NEVER buy a fund that has a front or end load, and NEVER buy a fund that has a management fee higher than 0.4% annually.

NO-LOAD Mutual Funds are best. There is no commission when you buy or when you sell. Avoid funds that have a 12b-1 fee.And look for funds that have low expense ratios, under 0.5%.

Start out with large cap funds, then go into mid cap funds.

If your employer has a 401(k) plan, and if he matches some of what you put in, then you should invest in that first, to the max every year. The plan will have some mutual funds in it. Follow the above "guidelines" and you'll be successful.

One last thought: Don't worry if they go down. They'll come back and go higher.

It depends.

For most people investing in mutual funds is easier--however you generally have to either pay someone else to select stocks for you (there are management fees that you effectively pay by recieving slightly lower returns that you otherwise would) or are locked in to receiving the same return as a market index of some kind (note that this is not necessarily a bad thing.) In general I'd recommend buying index funds because, frankly, most professional money managers don't provide higher returns.

If you enjoy investing, have enough time to do research, and can educate yourself about the market then there's nothing wrong with choosing your own stocks, though there are also no guarantees that you'll do better than a mutual fund either.

If you want returns that are comparable to the market average, then use mutual funds. If you want the opportunity to outperform the average, with the risk that you may significantly underperform the average, then buy your own stocks.

The fact that you are even asking this question is an indication that you should probably stick with mutual funds. I've read 27 books on investing, and wrote one myself ( http://www.invest-for-retirement.com ) , and even I use mutual funds only. Unless you have read countless books on investing, are well versed with stock nomenclature, and have more than $20,000 to invest, then you should do the smart thing and stick with low-cost mutual funds. Check out www.vanguard.com for some good funds.

I have found that mutual funds significantly underperform when compared to a good stock investment plan. In the past eight months, I have used a combination of The Motley Fool and a mechanical formula called TREPPE to decide which stocks to invest in. I've made about 30 percent returns. If you've got the time, the best way to go about deciding how to invest is to select different advisory services and try them out (most of the legitimate ones have free trials). Check their past histories and see what rate of return they have been getting. Pick the best one or two and start following their picks real-time (don't trust website claims, see if they deliver before investing your money). Mechanical formulas are the cheapest because you don't have to pay for them.