Hello and welcome to Financial Face-off, a MarketWatch column where we help you weigh financial decisions. Our columnist will give her verdict. Tell us whether you think she’s right in the comments. And please share your suggestions for future Financial Face-off columns by emailing our columnist at email@example.com. The face-off Inflation is stuck in overdrive, a potential recession is hanging over our heads, and the Dow Jones Industrial Average
and S&P 500
have both taken a dive this year. Many people are feeling understandably jittery about their finances.
Some may be looking at their investments through a lens of uncertainty, wondering if they should change things up. One perennial question some have: is it better to pick and buy individual stocks or buy shares of an exchange-traded fund (ETF)?Why it matters Investing is one way Americans build wealth. The choices we make in this arena can have serious long-term consequences — for example, on the amount of money we are able to save for retirement. Picking individual stocks lets investors suss out companies and decide to buy a piece of one that they think is going to do well. ETFs, on the other hand, can let investors get a piece of several companies at once. An ETF is a basket of securities; it can include stocks, bonds, commodities, currency. They’re similar to mutual funds because they’re made up of groups of securities. But ETFs differ from mutual funds because their shares can be traded throughout the trading day, whereas mutual funds trade at the end of the day. ETFs tend to have lower fees than mutual funds, though “the gap is closing” according to Investopedia, and ETFs are also typically more tax-efficient than mutual funds because they tend to generate fewer “taxable events,” says TurboTax.The verdict ETFs.My reasons Why put …