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Portfolios 309: Adding Stocks to a Fund Portfolio

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1.
Which statement is true?
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Investing in stocks can be less expensive than investing in funds. It's especially true if you're planning to buy two dozen or so large, steady companies and hold them for many years. You will pay the up-front trading costs and not spend another dime until you sell. With mutual funds, however, you'll pay annual expenses.
2.
In stock investing, the profit you earn on a stock after you sell it is a _______.
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Capital gain. Capital gains are the primary "oomph" that stocks can provide.
3.
Buying a collection of stocks can be cheaper than holding on to a mutual fund because _______.
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Both of the above. The nature of the cost structure can benefit stock owners who hold their stocks for long periods.
4.
Why do stockholders have more control over their capital gains taxes than mutual fund holders do?
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With stocks, there are no capital gains until the owner decides to sell her stock, and only if there is a profit. Mutual funds, however, must distribute any gains made during the year, whether fundholders want them or not. This can create a tax headache.
5.
If you want to add a little oomph to your mutual fund portfolio, _______.
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Add a few stocks at the edges of your portfolio. Adding stocks in small doses can rev up your returns and shouldn't damage the nest egg. An all- stock portfolio will likely have more than a "little" oomph, though.