Things to Consider Should you Manage Your Portfolio Yourself


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investment portfolio

The financial crisis has taught every financial analyst and fund manager a lesson. The lesson might not be concrete, and it might not be the same lesson for all, but it is a lesson nonetheless: greed should not be a motivation. The financial crisis was so bad, and it was totally unforeseen, that even hedge fund managers lost money. Hedge funds are supposed to keep above water if others went under. As an individual investor, should you manage your portfolio yourself?

The take away from all of this is that current situations show that not even professionals know everything about investing. Of course, amateur investors and day traders may know less, but if you are motivated enough, know the market and follow some simple guidelines, you should stay ahead of the curve.

There are a lot of books for personal investing. One of the most successful authors on personal investment also happens to be a successful investor. Warren Buffett was at one point in time considered the richest person alive. He has written several books about his investment strategies and about running his company, Berkshire Hathaway. He leaves it up to other writers how simple his lifestyle is.

Besides the time and patience, the following is a short list of things to consider, before you ask yourself should you manage your portfolio yourself:

  • Do you know the industry? If you already have a portfolio which was setup for you by your investment planner, you have to ask yourself if you know anything about these investments or the companies you have invested in. that is a good thing. For instance, if you are a soda drinker and you have stocks in Coke, that is in your favor. However, if for instance, you don’t know anything about heavy equipment and you have stocks in Caterpillar or International Harvester, you should re-evaluate your portfolio. If you know the industry or you have experience in working with a company gives you information about how the stock will probably perform given the prevailing political, international or social situation. Should you manage your portfolio yourself in this situation? Yes, probably, as long as you know when to buy and when to sell.
  • Are you investing for the long-term or for the short-term? One strategy which is always hammered into any rookie investor is that in the short term, the market wins. Day traders do not win big, and they are prone to losing all their investments. On the other hand, long term investors can start small, put up additional small monthly investment to make the principal grow, and just let the company handle itself. All things being equal, and due diligence has been given to a company’s investment history, then there should be no need to constantly tweak your portfolio. In this instance, should you manage your portfolio yourself? For the long term, yes, but if you just want a short term investment, you should leave this to a fund manager. A mutual fund will give a short term investor better returns compared to trading daily. A mutual fund also has a better performance for the short term investor.
  • Do you have the time? Managing a portfolio entails an investment in time and resources. You should be studying the market, and reading up on trends about almost everything which have an impact on your portfolio. You do not have to be always checking on your portfolio’s performance, but at least you have to be reading the finance and economics news. Should you manage your portfolio yourself, given that you do not have the time to study the market? No, you should not. It does not matter if the economy is shaky or not, or if there is an economic upturn, putting time to monitor and study your portfolio is a requirement if you want to manage it yourself.