I second all the great comments made by malcontent. Slow and steady wins the race.
For those folks who think they have the knowledge and skills to buy individual stocks, or to jump into some kind of market timing scheme, or some kind of "technicals" program, you have to remember this: There are tons of people out there with far more information than you have, and far more experience than you have. And even the market professionals who buy and sell for managed funds cannot beat market averages and more often, do worse than average.
There is a great (and funny) article about managed funds and their inability to beat the market over the long haul.
https://www.chicagobooth.edu/review/why ... h-the-pack A cat batting a toy mouse onto a number grid beat three money managers in market return.
Second, any single stock is inherently risky when compared to holding a basket of stocks in a similar line of business. Let's say you have an opportunity to invest Acme Construction, a company which builds office buildings, or you have the opportunity to invest in a building construction ETF which holds the stocks of 100 companies that construction in proportion to their capitalization.
Both the ETF and the individual stock will go up or down along with the broader market but you may find that the ETF has less extreme ups and downs because the values of all the stocks in the ETF will try to average towards the center... some do worse, some do better. Profits may also tend towards the center... the price you pay for a risk reduced investment.
But let's say you buy Acme Construction because they just built a new high rise apartment complex in KL. The building is in high demand and Acme is riding high, so you dump $10,000 into it. Six months later, it is discovered that the foundation is faulty. Two months after that, the building falls over, and the next thing you know, Acme is bankrupt and your $10,000 investment is now worth nothing.
Now suppose you put that $10,000 into an ETF with 100 companies in it, including Acme. Acme crashes as before, only this time your investment might only drop down to $9800 because the rest of the companies are doing just fine.
I'll say one more thing about market timing and panic selling. Some people sell when the market drops, to avoid more losses with the idea that they'll buy back in when the market turns. But there is plenty of evidence that this is bad policy. First of all, you've sold at a loss. Then when the market turns and starts going up, you buy back in. So, you've already locked in a loss that you must makeup before you can even return to where you were.
Timing guys are at risk as well... the idea is that you supposedly read a basket of market "indicators" and then you sell just before the market drops and buy back in just as it starts going up. Except, those "indicators" are notoriously unreliable, and between selling early and not capturing all of the upside appreciation, or selling late and riding a stock all the way down, market timers also do worse than the market averages.
On a personal note, I've invested in individual stocks a handful of times because I was pretty sure that I had the stock figured out. Most didn't work out. Shorted Dell a few years back... only a few thousand worth... but the stock didn't move as expected and it took me more that 6 months to avoid a loss and walk away with about a $20 profit.
I invested in Crown Castle after rabble rouser Elliot investments bought into it, figuring that since this previously caused rises in valuations of the companies Elliot invested in, I'd make a buck. It's been a dog. I would have been better leaving my money in an S&P ETF.
Or, Texas split electric energy companies into regulated and unregulated components... seemed like the unregulated company was the one to invest in. But guess what? The regulated company has provided far better returns.
For these two reasons (diversity of stocks in ETF and not trying to beat market moves) buying and holding of ETF's and mutual funds is the way to ensure steady growth with the least amount of risks.
