3 Reasons to Stay with Investment management
The investment management scene has been choppy for the last couple of years, with fund managers reporting that nervous markets are seeing a downturn in their business. However, there remain some good reasons to have your investments taken care of by a professional…
While it is possible for individual investors to do well on their own, the average investor doesn’t have the time or possibly the inclination to learn all of the complexities of the investment scene. In a Journal of Finance study, it was found that individuals who attempted their own investment management had an average annual performance 3.7% below the market as a whole. Key reasons for failure include lack of knowledge and over-confidence in their own abilities. A good investment advisor will stay abreast of market developments and know the ins and outs of each investment type so that the client doesn’t have to. They will also tailor your investment package to suit your goals and life stage.
Access to a wider investment range
The average investor is not Donald Trump, stacked with funds and able to enter into virtually any investment arena he desires. Investments usually require a minimum sum to invest. Sometimes these minimum sums are larger than what most investors have, or want to put into a single investment. Investment management with a professional provides access to these investments by way of managed or mutual funds, where funds from multiple investors are pooled to be able to meet the minimum investment requirements.
Traditional bank savings are not always a good plan
Most of us would like to be able to make a maximum return on our money, preferably with as little effort as possible. However, putting your money away in an interest-bearing bank account is a conservative approach and will not usually allow you to make particularly good returns. Sure, performance on the share market and in managed funds has been mixed lately, but if you look at longer term trends in these types of investments, they tend to give a better reward in return for the risk outlaid. Again, ask a professional for your investment management advice, they are trained to offer you solutions based upon your risk appetite.
Australian All Ordinaries Index; 1988 – 2012 (source: Shareswatch Australia)
For the average investor, these are just a few reasons to stick with the fund manager for your investment management needs. Remember that if you don’t want to have to learn such terms as ‘Efficient Market Hypothesis’, ‘Capital Asset Pricing Model’ or ‘Modern Portfolio Theory’, then investment management as an individual can be fraught with hazards and professional advice may be the key to your investment success.