Differing Opinions

Q When I’m reading financial periodicals or Motley Fool articles or am watching CNBC, I often see different opinions on various stocks, with some experts saying buy and others saying sell. What’s up with that? — L.S., Victoria, Texas A Anyone evaluating a company can come away with a different opinion about its prospects and likely trajectory. Even the best stock analysts and investors are sometimes wrong.

Note, too, that each can be different in what they’re looking for — some want undervalued stocks, while others may be willing to take more chances, hoping for a bigger payoff. It’s good to gather different opinions, consider various arguments, do your own research and ultimately make up your own mind. Q With mutual funds, are index funds best for beginners (like me)? — D.C., Riverside, California A Low-fee, broad-market index funds, such as those that track the S&P 500, are indeed perfect for most people — beginners or not. An S&P 500 fund will have you instantly invested in 500 of America’s biggest companies. (Many of them have sizable overseas operations, too, giving you international diversification.) Broader funds, such as Vanguard’s Total Stock Market Index, include smaller and medium-sized companies, too, while “total world” indexes also include foreign companies. Seek index funds with low fees. Many charge less than 0.25 percent annually.

Index funds should have you matching the performance of their underlying indexes. If you want to aim even higher, you might study and carefully choose a few individual companies in which to invest — but doing well at that can take a lot of time, energy and skill. It’s hard to beat the ease and results of simple index funds.