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Part: 1 Background > Direct versus Indirect Investing - Pg. 7

7 Chapter 2. Direct versus Indirect Investing Basically, households have three choices with regard to savings options: 1. Hold the liabilities of traditional intermediaries, such as banks, thrifts, and insurance compa- nies. This means holding savings accounts, money market deposit accounts (MMDAs), and so forth. Hold securities directly, such as stocks and bonds purchased directly through brokers and other intermediaries. Hold securities indirectly, through mutual funds and pension funds. 2. 3. Investors always have direct investing as an option, making their own buy and sell decisions, typi- cally through a brokerage account. If you have enough money to invest, you could duplicate the last known portfolio holdings of any financial intermediary, such as a mutual fund. If you have the time and ability, you can make the ongoing decisions in terms of managing the portfolio. With direct investing, you make the decisions. However, most investors lack the funds necessary to assemble a portfolio of 50 or 100 stocks, and