Should I hire a top financial advisor or should I manage my investments on my own? It is one of the most common questions for investors, and there truthfully is no single right answer to the question. Over the years, more and more people are deciding that they will invest on their own through popular outlets such as top online discount brokers. Today, I want to look at the things that must be done if you do choose to manage your own investment portfolio.
Four Keys to Managing Your Own Investment Portfolio
1. Be Willing to Put in the Time- Many people like the sound of being in control of their own financial destiny, but they don’t realize how much of a time investment it truly is. Managing your investment portfolio requires a serious investment of your own personal time. Realize that if you decide to skip this all important step, you are simply cheating yourself and hurting your investment portfolio. Doing your homework is absolutely critical to long-term success!
2. Keep Emotions in Check- Do you struggle to keep your emotions in check? If you do, then you probably aren’t cut out for managing your own investment portfolio. It is easy to get a quick trigger finger and constantly buy and sell stocks, but in the long run you’ll be eaten up by the fees associated with this practice. The financial markets often bring about stress, but if you can’t take that stress without panicking you should definitely avoid managing money.
3. Keep a Personalized Financial Plan- Your investment portfolio should always reflect where you and your family are at in your personal financial situation. Plan out your goals and then use your investment portfolio to meet those goals. As the years go by and the situations in your home change, you should always be flexible to changing your financial goals and your investment portfolio.
4. Keep an Appropriate Risk/Reward Level- It can be easy to jump into this business and start looking for stocks or assets that will double in value over the course of just a few years. Realize that while these can be great, they also carry great risk. Consider your personal situation and how much risk you are able to take on. Don’t invest the money in speculative stocks or assets if you can’t afford to lose it. Diversifying your portfolio is a great way to reduce the risk level, while still giving yourself a good chance of earning solid returns.
Those are your four keys to managing an investment portfolio. Do you think you have what it takes to do all four of these things on a consistent basis? It is a large decision, so I suggest you take your time and make the best decision for you and your family!