With money to invest, there’s a need to make sure funds will have been invested wisely. For this reason and others, many people opt to have a registered stock broker or financial adviser handle their investments. This practically eliminates the onus of having to personally allocate or redirect funds from one investment venue to another. Only occasionally will the broker or advisor find it imperative to call upon the investor to make hard decisions concerning this or that investment.
If this lulls the investor into a false sense of security, he or she may discover much too late that the portfolio has suffered either neglect or inappropriate manipulation. To prevent these possible unfortunate situations, the investor may wish to take full control of all investments.
There exist other perfectly logical reasons for an investor to personally take full responsibility for investments. Here are three.
The very process of managing your own investments makes it necessary to remain aware of the process and of the outcome when making a purchase or sale of a stock or mutual fund. Daily newspapers list stock and mutual fund price variations for many of the securities listed with the stock exchanges. This also depends on the size of the newspaper’s business section. At Yahoo.com and other Internet venues, the online investor can discover daily price changes of individual stocks and funds as well as other information about them.
While a broker or financial advisor provides the same information through a telephone call, the investor who searches it out personally realizes a certain amount of satisfaction for having accessed verifiably reliable data about the investment.
The person who manages his or her own investments obviously enjoys full control over their transactions. By careful selection of stocks, bonds and mutual funds, the investor can make sure that no investment money supports the production of unhealthy (cigarettes) or deadly (automatic weaponry) manufactured goods or merchandise.
Personal control also means having the ability to match investment activity with the investor’s other needs and goals. These may change drastically and suddenly, making it necessary to alter the pace of security purchases or sales.
A third benefit of taking charge of your own investments has to do with reducing the cost of making those investment decisions. This usually means making all or most trades online.
With online trading, the investor can make investment decisions at times he or she deems most convenient. The trades cost considerably less than those normally charged by full-service brokerage houses. This can happen in part because online investment services such as Ameritrade.com, E*Trade.com, Fidelity.com, Scotttrade.com, and Schwab.com do not offer in-depth advice to individual investors. Instead, investors rely primarily on their own understanding of analytical tools and information acquired independently about specific stocks or funds.
The investor who takes time to learn a few basic principles of investing and answer hard questions concerning topics such as discipline, needed cash flow and risk tolerance can assume personal control of his or her portfolio with utmost confidence.