When it comes to choosing where to put their money, investors have a lot of choices. Yet despite all the alternatives Wall Street has offered to investors recently, the best way to become a true expert investor is to focus on an investment classic -- individual stocks.

Beginning investors often gravitate to the simpler options available to them. With ETFs and mutual funds, it's easy to put small amounts of money to work without worrying about the added risks of an undiversified investment portfolio. And with thousands of different funds to choose from, you can follow nearly any strategy you want, from a broad swath of the entire stock market to any of dozens of focused niche funds that target particular areas.

In fact, in some situations, funds are all you have access to. For instance, most employer-sponsored 401(k) plansdon't even offer the chance to invest in anything but funds. If you want something else, you'll often have to wait until you can roll that 401(k) account over into a new IRA after you quit your job.

Why stocks?
Using funds and ETFs isn't a bad way to invest. If you have the relatively modest goal of simply matching the market's returns, then index funds and ETFs make it extremely easy. Moreover, if you search through the assortment of actively managed mutual funds, you may find proven fund managers who can deliver market-beating returnsconsistently over the long run.

But even the best funds can't match the potential returns of the top individual stocks. Even over the past decade, as the overall stock market has languished with negative returns, these stocks have put in phenomenal performances:

Stock

10-Year Total Return

Average Annualized Return

BHP Billiton (NYSE: BHP)

817%

24.8%

Potash Corp. (NYSE: POT)

1,057%

27.7%

Annaly Capital Management (NYSE: NLY)

481%

19.2%

Nordstrom

165%

10.2% Continued...