Should I Manage My Own Investments? Two Types of Investors

If you own any of your own investments, you may have asked yourself if it would be better to manage them yourself or to hire a professional to do so on your behalf.

Is one way better than the other? What do you have to gain or to lose based on your decision?

The decision to self-manage or delegate management of your investments is a personal one and is not a question of one way being right and the other way being wrong. Often times it comes down to the way that you are wired as a person.

There is a spectrum of investing personalities. At one end of the spectrum is what I call do-it-yourselfers. One the other end of that spectrum is what I call delegators

A financial “do-it-yourselfer”, obviously, prefers to manage their own investments, do their own research, and pull the trigger for when to buy or sell their own investments. For some, it is a matter of sheer enjoyment. They actually take pleasure in this process. For others it may be an issue of cost. Even though they aren’t necessarily thrilled about managing their own investment strategy, they do so on the basis that it is less expensive; they are able to avoid any management fees or commission loads.

A financial “delegator” prefers to delegate the ongoing investment management to a third party professional. There are many potential reasons for this. It could be a lack of confidence or experience or it could simply boil down to time savings. In other words, they would prefer to spend their time doing things that matter more than money and they have found that investment management is one of the delegatable things of life.

Once again, being a do-it-yourselfer or a delegator is not about one being better than the other. There are tradeoffs that each experience in life.

One tradeoff between the do-it-yourselfer and delegator personality types (and this goes beyond investment management into all of life) is the trade off between time and money. The do-it-yourselfer spends more time to avoid fees or costs (or just enjoys self managing and the cost savings are an added benefit). The delegator willingly gives up money by paying fees or commissions in order to free their time and energy or to gain a higher level of confidence.

Is one better than the other? Well it depends on who you ask.

Any investment manager who makes a living from managing investments will probably tell you that no one should be foolish enough to try to manage their own investment strategy. At the same time, there are many good resources to help the do-it-yourselfer, making professional investment management optional.

What type of investor are you? Answer the following questions and see if you get any clues:

1. Do you have a high level of confidence in your own investment decision making?

2. Do you enjoy the process of researching, choosing, and updating your investments?

3. If you took the time to manage your own investments, are you confident that other important parts of your life would not be neglected?

If you answered yes to most of the questions then you’re probably a delegator. If no then you may want to consider partnering with a competent professional to help you.

The Stewardship Solution provides professional investment management for all types of investment accounts including company retirement plans (through your company or FOR your company). For a complimentary 20 minute phone consultation to discuss your situation, please contact Derrik Hubbard by email at dhubbard@thestewardshipsolution.com or call 661-829-4154 .