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[quote=Anonymous]The importance of owning individual stocks is the experience one gains by having skin in the game. Owning mutual funds is the stock market equivalent of having a saving account at your local bank. Over time with both mutual funds and savings accounts your wealth will gradually increase, but you'll never be exactly sure how it happened. For most people that approach is just fine and if they've doubled or tripled their investment by the they retire at age 65 they are very content.

However, for those who want to create generational wealth they need to be active participants in the creation of their wealth and not passive bystanders. Passive bystanders see nothing, hear nothing and know nothing about how their money is being used to create wealth. Mutual funds will make money for you, but at the same time they are siphoning off part of your potential wealth to make their companies wealthy.

Passive investors are not investors at all; they are marks for the mutual fund companies.

Being an active investor does not mean an individual is making trades everyday, week, or even month. It only means an individual is keeping track and taking responsibility for their investments. To me this is the only approach that makes sense. If a person were a farmer wouldn't they keep track of their seed, fertilizer, and harvesting equipment?  Wouldn't the owner of a hardware store be require to keep track their inventory?  Of course they would. However, consider this for a moment, if a farmer wanted to make more money mighten he buy more land or equipment if the they became available and the price were right.  The same would apply to the owner of the hardware store. If another store front became available in a gentrified neighborhood where there was little room for a big box competitor like Home Depot to move in mighten he open a second store and attempt to double his profits?

Well the rules apply to investors. Farmers and businesses can spot opportunities to expand and prosper because they are activitely engaged and ready to act when opportunities arise in their given businesses.

Unless we think of ourselves as capitalists investing our money in real businesses, we will be blind to greater investment opportunities when they arise. Unless you have skin in the game, you'll never see opportunities for exponential investment growth even if it's right in front of your face.

One final thought on this matter is that it takes money to make money. It takes sacrifice and living debt free to accumulate enough money to be successful investors. Engaged investors can see the benefits of accumulating wealth on their monthly statements and by going online to check their brokerage accounts. This in turn gives them the motivation to save and sacrifice a bit more everyday because they realize every dollar they save has the potential of growing exponentially leading one day to very comfortable lives for themselves and their children as well. [/quote]

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