Some on-line banks may not be FDIC insured. It would be wise, therefore, to find out if the bank is FDIC insured before depositing your money. Investments sold by FDIC insured bank are not covered by FDIC insurance. In addition to the tax implications, there are other factors to consider when comparing mutual funds and individual securities investing. If you have limited knowledge or understanding of investment products and terminology, you may need help in managing your investments.
Investment management is one benefit of mutual funds investing.
If your answer is no, mutual funds may be your choice. Portfolio or money managers usually require much higher minimums. This is not to say that you can't invest lesser amounts with brokerage firms, but don't expect a great deal of individual attention to your portfolio unless you meet the firm's minimum requirements. When you purchase most mutual funds you are investing in many companies in several industries. Sector funds do not provide diversification because they concentrate in one industry, i.e., technology, health, energy, etc.