It depends entirely on the person investing. Of course you must take in risk factors, but you also need to think about what your goals are. Are you planning for retirement? Do you have a young child and want to start saving for their post-secondary education? Or are you simply trying to raise your net worth while bringing in some extra income?
Using myself as an example, I’m 20, but am already starting to put away for retirement. I currently have a mutual fund package suited for my personal income which is not much; I’m only paying $30 per month into it right now. When you are as young as I am, or as old as your mid to late 20’s, mutual funds maybe the way to go, especially if you’re like me and can’t afford a lot of risk at this point in your life when it comes to finances. The fund I am set up on is averaging about 3-4% a year, and right now I’m happy with that kind of growth, though I may look into higher risk options down the line as I prepare to start a family.
If you’re already married, and do have sustainable income, but you’re still not ready to take on too much risk just yet, talk to your local bank about perhaps looking into individual penny stocks. Penny stocks that I’ve been following have been moving slow to medium at most, and a majority of them have been on an upward climb.
Now if you do go in this direction, one thing you do need to be forewarned about the commission your broker will charge you. Some brokers, including major banks charge anywhere from $25 – $45 a trade. Some will also jack up their commission with equities trading below one or two dollars. In the many brokerage firms I’ve talked to in the past couple of years all say that if you are going to invest in penny, one dollar, or two dollar equity stocks, you should be investing upwards of $1,500 to get your moneys worth on the return.
If you’re young, I would personally go toward mutual funds, they’ll have plenty of time to grow. Now obviously don’t rely on me, I’m just giving you ideas to run through your mind and with your spouse or family.
If you want to try out different equity trading schemes, I recommend checking out: