Investing on your own and having a fund manager both have their own set of advantages and disadvantages.
It ultimately depends on your individual preferences, level of expertise, and the amount of time and effort you’re willing to commit to managing your investments.
Let’s take a look at the pros and cons of each approach so you can make an informed decision.
Self Managed Investing
Pros For Investing On Your Own
#1 Control
You have full control over your investment decisions if you decided to manage things yourself.
You can choose the specific assets, stocks, or funds you want to invest in, aligning your investments with your personal goals and risk tolerance.
#2 Flexibility
When you are the one managing your own account, you can adjust your investment strategy quickly in response to changing market conditions or personal circumstances.
There’s no waiting for approval from a fund manager.
#3 Cost
This is one of the biggest things for many investors. Investing on your own can be more cost-effective, as you don’t have to pay management fees or other charges associated with having a fund manager.
If you end up making lots of transactions, trading fees can add up. But on the other hand, the average fund manager charges 1% of your portfolio on a yearly basis no matter how it performs.
#4 Learning Opportunity — Personal Development
Managing your investments yourself can be a valuable learning experience. You gain insights into financial markets, investment strategies, and economics.
This can cause a ripple effect by reducing your insecurities. As you achieve knowledge and success, you acquire more confidence in your abilities to navigate life.
Just remember to take breaks before you get overwhelmed. Learning takes time, and is directly proportional to the effort you put in.
Cons For Investing On Your Own
#1 Time and Effort
Successful investing requires research, analysis, and ongoing monitoring, which can be time-consuming and demanding, especially if it’s not something you enjoy doing.
Income investing is more passive than many other strategies and it does get easier the more seasoned you get.
I’ve been considering creating a subscription for people who want complete access to my portfolio picks and when I make adjustments.
#2 Proficiency
Not everyone has the necessary expertise to make informed investment decisions. But this doesnt mean you can’t learn these skills.
It’s completely normal to feel insecure when you lack knowledge. Trust those instincts to prevent you from making suboptimal investment choices to prevent losses. They have paper trading for a reason.
Expertise comes with experience. I’ve already been though that pain. Do yourself a favor and absorb recommendations so you don’t have to make the same mistakes that I did.
#3 Emotional Biases
Managing your investments can be emotionally challenging. Fear or greed may influence your decisions, leading to impulsive actions in response to market fluctuations.
The best advice I can give here is to avoid making decisions from this emotional place. The market is irrational, but you don’t have to be. Create a plan of action ahead of time for various situations.
#4 Limited Resources
Individual investors may not have access to the same level of market data, research tools, and insights that professional fund managers can access.
I don’t use anything more than what’s available in my brokerage account, YahooFinance, and reading some new articles pertaining to my holdings or watchlist tickers. Don’t let the idea of “the right tools” hold you back.
Investing With A Fund Manager
Pros For Having A Fund Manager
#1 Professional Expertise
Fund managers are trained professionals with expertise in finance and investing. They have experience in managing portfolios, creating diversification, managing risk, and making informed investment decisions.
I’d like to not that this doesn’t always mean that any fund manager is a good fit for you. Interview them and make sure their goals align with yours before you hire them.
#2 Saves Time
With a fund manager, you delegate the day-to-day monitoring and decision-making, freeing up your time for other pursuits.
This can be especially appealing if you have a life full of passionate pursuits.
#3 Discipline
Fund managers generally stick to a predetermined investment strategy. They have experience with remaining emotionally untriggered by market fluctuations.
Their ability to remain level headed will reduce risk of making unfavorable investment choices.
Cons For Having A Fund Manager
#1 Costs
Hiring a fund manager comes with management fees and expenses that can eat into your investment returns.
Again the average fund manager charges 1% of your portfolio on a yearly basis no matter how it performs.
#2 Lack of Control
When you hire a fund manager, you give up control over the specific assets in your portfolio and you can’t make changes when you want to.
Fund managers typically have predetermined investment strategies, so individual customization may be limited.
#3 Performance is Not Guaranteed
While fund managers aim to outperform the market, there’s no guarantee of positive returns as the market has down years.
Some managers may even underperform the market benchmarks which can be very frustrating — especially when you’re paying regardless.
To Sum Things Up
Investing on your own gives you control, potential cost savings, and a valuable learning experience, but it requires time, effort, and expertise.
On the other hand, having a fund manager provides professional expertise, pre-established strategies, and time-saving benefits, but it comes with management fees and less control over individual investment choices.
Your decision should be based on your financial goals, risk tolerance, and willingness to take on the responsibilities of managing your investments.
Some investors like to do a combination of self managing while consulting inventors who have more experience. I do coaching consultations if that’s something you’re interested in.
