If you are lucky, there comes a point in your life when the question of “Do I need a professional to help me with my investment management needs?” becomes relevant. It is often a change in financial circumstances such as: receiving an inheritance, a lump sum payout from a 401(k), selling a business or other changes. Some self-analysis is key to figuring out whether or not you are cut out to be your own investment manager.
Do I have the passion, discipline and training to do the work required? Some may be surpassed by the use of the word “passion” but we all tend to do what we have an interest in. If other things are more interesting you will spend your time there and not on the investment management piece. Of course, like any other endeavor, certain education and training is helpful in managing a portfolio.
What type of investment management strategy will I employ and why? In my observation, of over 30 years in helping clients with portfolios, many are put together piece by piece based on “Oh!…this sounds like a good idea” with little attention to how the investments will work together to build a meaningful portfolio. Decisions about whether to employ a passive (index) strategy or active strategy will be important in the design process.
How will I obtain valuable research and data for designing an effective portfolio? Certainly the popular financial media has lots of information and data, but using it in a meaningful way is extremely challenging. Using information and data obtained from those sources is difficult and episodic at best. The web is full of information as well, but the most valuable data is in sites requiring a subscription of one form or another. The old saying “you get what you pay for” is appropriate as you consider your sources.
For those with the passion and discipline, combined with an investment management strategy, managing your own investment portfolio can be an interesting and a potentially fruitful endeavor. On the other hand, if you lack these critical attributes then engaging a qualified financial advisor is likely your best bet. Your money is serious stuff and a reasonable and serious approach is necessary to obtain a good result.
To learn more about Bob Klosterman, view his Paladin Registry profile.
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