I Took The Plunge: Citigroup (NYSE: C)

As I indicated in yesterday's post about my favorite individual stock picks, I had been debating whether I should put some of my money in individual stocks because of the recent market downturn. One of the stocks I have had my eye on is Citigroup (NYSE: C), due to its very low price point and my confidence in its ability to recover from the market downturn. So this morning I took the plunge and bought twenty shares of Citigroup at just above $18/share.

Citigroup should recover nicely once this sub-prime lending fiasco is behind us, and my $360 investment should show a healthy profit down the road. Of course, it is always possible that Citigroup will go the way of Bear Stearns Companies, Inc. (NYSE: BSC), which was trading at $150/share and is now at a meager $4.50/share. But as one of the world's largest financial institutions, I am confident that Citigroup will be with us for a long time to come.

Was it an emotional decision to finally invest in an individual stock instead of taking that $360 and putting it into my Roth IRA ETF portfolio? Perhaps, but I still maintain that it was a well-thought-out emotional decision. It is true that you should invest with your head and not with your heart, but the two are not necessarily mutually exclusive. I did get some emotional satisfaction from taking on a riskier stock, but Citigroup is a blue chip stock that I plan to buy and hold for the long-term, which significantly reduces the risk of putting a chunk of money into an individual stock instead of an index fund.

To make it perfectly clear, though: my long-term ETF portfolio will still be my primary investment vessel, and I do not advocate putting all of your money into individual stocks. But picking up a few shares of a stock at a good value will potentially increase your investment returns a bit, and I argue that there is no harm in doing so as long as you invest wisely.