I came across a question on NetworthIQ that asked about people’s experiences with investment advisers. This individual has been paying a former colleague to manage his investments but is not happy with the results. In one account he’s lost 15% over the last two years and in another he’s basically at break even over four years. As a comparison, the S&P 500 is up ~ 1.8% over the last two years and ~12.2% over the last four years. Given that comparison, I agree with his concern about his investment adviser’s performance. If he had chosen to simply invest his money in an S&P 500 Index fund he would have crushed his “friend’s” performance and avoided any adviser/manager fees he paid.
Managing your own investments is neither as glamorous nor as difficult as many think, but being your own money manager is certainly doable if you have the drive to accomplish this goal. I have successfully managed my own investments for almost 16 years now.
While I am an advocate of the DIY approach, I do believe that investment advisers have a place in the business. They provide valuable services (albeit at a price) for many people that might not invest/save/plan for retirement otherwise. My father has an adviser that he pays fees to (no it’s not me) and is quite pleased with his results. While he may be happy, I desire much greater wealth than he has amassed and am doing it on my own without paying exorbitant fees. I must be honest, however, and admit that I do get a little help here and there from an investment expert but at a significant discount compared to most investment advisers.
My professional help comes in the form of a weekly, nationally syndicated talk radio show on the subject of personal finance and investing called Money Talk by Bob Brinker. Bob is all about helping those who want to help themselves. His program mixes politics, finance and education in a manner that lends itself to the layman who desires to take control of his investments.
Managing your own investments, while not difficult, is not for everyone, but I think that if you value your hard earned money and have a dedicated drive for success, you’ll be able to learn what you need to in order take control of your investments and mind your own business.
Good Luck,
-Jeff
I’m Minding My Own Business, are you minding yours?
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4 Comments
July 4, 2008 at 5:40 am
Very lucid and insightful. Thank you for sharing. I have been running my own investment campaigns since yonks ago and I would probably only let somebody else handle my money if I go blind. Seriously though, I got wealthy through investing wisely and patiently. I doubt there are many out there who would handle others’ money with as much discretion.
July 4, 2008 at 8:33 am
S&B,
Thanks for the comment. I’ve often said that nobody cares about your success as much as you do.
July 9, 2008 at 1:36 pm
Great post. I can’t believe how many people have money managers that aren’t beating the S&P. Hopefully your post will convince more people to ditch under-performing financial advisers and get an index fund instead.
July 9, 2008 at 1:51 pm
Thanks for the comment Ryan. I go it alone, save for some advice from the newsletter I mentioned above. So far it’s working out, I doubled the market’s return last year. My out-performance cost me only $245 (for my investment letter) which amounts to 0.1225% of my investment portfolio. For the value I received, the costs were very reasonable (and low).
I understand that charting a course (strategy and execution) are not for everyone. Index funds do have a place within my portfolio and are an excellent investment vehicle for those who know very little, or choose to learn very little about investing.