Hi Anon, in my opinion,
It depends on whether you are willing to take on more risk for higher potential returns.
By buying only AMZN, you are exposing yourself to both general market risk + the risk of the company itself failing. So, if there were any adverse events for AMZN, your entire capital would be at risk. But of course, in return for higher risk, you get potentially higher returns. (keyword: potentially, no guarantee AMZN will continue to do well)
But if you are looking to participate in the growth of the market while still making sure you are not taking too much risk, then as you mentioned, SP500 being diversified would be a safer bet. Any one company in the index failing will not cause too much damage to your portfolio. And for taking lower risk, you also cap your upside potential.
So ultimately it's about your risk appetite, + whether AMZN will continue to grow (or just simply outperform SP500). Huge risk appetite + believe that AMZN will continue to outperform the index, then AMZN will be a better buy.
disclaimer: not financial advice, do your own due diligence :-)
Hi Anon, in my opinion,
It depends on whether you are willing to take on more risk for higher potential returns.
By buying only AMZN, you are exposing yourself to both general market risk + the risk of the company itself failing. So, if there were any adverse events for AMZN, your entire capital would be at risk. But of course, in return for higher risk, you get potentially higher returns. (keyword: potentially, no guarantee AMZN will continue to do well)
But if you are looking to participate in the growth of the market while still making sure you are not taking too much risk, then as you mentioned, SP500 being diversified would be a safer bet. Any one company in the index failing will not cause too much damage to your portfolio. And for taking lower risk, you also cap your upside potential.
So ultimately it's about your risk appetite, + whether AMZN will continue to grow (or just simply outperform SP500). Huge risk appetite + believe that AMZN will continue to outperform the index, then AMZN will be a better buy.
disclaimer: not financial advice, do your own due diligence :-)