Great post mrtr33. While I will dabble in individual stocks now and then, I have most of my money in mutual funds (as you suggested). One of the keys is diversification and you need a lot of money to adequately diversify via individual stocks whereas mutual funds make it easy. One point that I will add in regards to picking a mutual fund company, in addition to picking a fund with a proven track record, also take notice of the expenses that the fund charges, as these can vary greatly. Also research the fund manager(s) to see how long they have been at the helm. Were they the ones responsible for the consistent 10 year run or was there a recent change? Also determine your risk tolerance. I realize that I have many years until retirement and it doesn't phase me (too much) to see my portfolio down 50% (as it has been in the past year), as I believe that time is on my side and that long-term aggressive mutual funds are the best option for me. My brother can't stand to see his portfolio decline, so he's in more conservative funds. Higher risk = higher potential reward.

Individual stocks can be very rewarding, but you have to do your research and keep on top of it. I have doubled my money in a week but I have also taken 80% losses. Personally, I view myself investing with the mutual funds and "playing" with individual stocks. I am completely okay with losing the money that I am playing with and picking a couple of individual stocks is sort of fun. But that's just me and I'm not saying it's the same for anyone else. I became interested in investing in high school and started buying mutual funds as soon I turned 18 and stocks at 20. I also second Mark's suggestion to read about the markets.

A few of the books that I remember from my college classes are:
- Benjamin Graham's "Security Analysis". Graham was sort of the father of value investing and greatly influenced Warren Buffet
- Peter Lynch's "One Up on Wall Street". Lynch ran Fidelity's Magellan fund for 13 years, averaging a 29% return, which is fantastic
- William J. O'Neil's "How to Make Money in Stocks". O'Neil was successful enough as a stock-picker that he was able to buy a seat on Wall Street by the age of 30 and went on to start a paper, "Investor's Business Daily" or IBD.

Read and determine what your investing style is. Graham & Buffet are value guys while O'Neil is more of a growth investor. A friend and I actually ran a yearlong stock simulation where we each had a hypothetical $1M. We would track all of our "transactions" in order to see how the different philosophies played out and what style we were each comfortable with. And it didn't cost us a dime, but it did take a lot of time. Time that I don't have now (we were in college at the time), but I'm throwing it out there as something to try.

I was a member of the Motley Fool for a year or so. They recommended some great stocks and would explain their reasoning for recommending it, which is more valuable to me than just giving me a stock symbol.

This is all just my 2 cents. Take it for what it’s worth.