<prompt> Human: posted this over at rinvesting, wanted to see if i could get somedifferent if any feedback heresomeone posted about it two days ago didnt get much in the way of a response.I am very new to the investing game, but recently securing a full time job and having alot of money building up in a useless savings account i have an emergency fund already I wanted to get into some trading...Im likely going to buy into a Vanguard fund with a large chunk of my extra savings, but this looked like an excellent idea for someone like me who doesnt have alot of capital to invest but needswants a nice mix of stocks.What are your opinions of it? Are there any big caveats im missing?Would you have any other suggestions instead of this that would achieve something similar?Assistant: Trying to predict future performance of individual sectors or companies is a fools game.Human: but whats really the difference between this and a focused mutual fund? except that with this you dont pay a mutual funds fees? And with 1000 minimum, thats a possible minimum of 4 sectors you can buy into. how diversified does one need to be?and the question is not so much asking to predict the future so much as the idea itself of getting a bunch of fractional shares in different companies to spread out the eggs so to speakAssistant: Focused mutual funds are generally a bad idea too. You say you want focused, and then you say you want to spread your eggs around. Which one is it? You cant have both. Why screw around with questionable stuff like this instead of just using an index fund that everyone and their grandma knows works?Human: well its not mutually exclusive. as i said, you can buy 4 focused funds and spread around a bit.well no its not likely the safest investment strategy, but as with anything on the market its always risk vs reward.thanks for your input.  <response>: Im not arguing for what is safest. Im arguing what is optimal -- risk vs. reward. Risk is fine, but its just pointless to take more risk than is compensated by the reward. When you speculate on sectors or companies, you are taking on a lot of risk that is not fairly compensated for by the potential reward. Its just not a good trade-off. 