Should I Manage My Own Portfolio or Hire a Professional?

Gaby Revel

When faced with an important task that must be done, we often find ourselves wrestling with the question of whether to take on the task personally or hire it out to a professional. The answer to that question is both simple and complicated. It all depends on how comfortable you are in doing it alone.

If you’re not so sure about your own abilities to effectively oversee your investment portfolio, you’ll next have to ask yourself if you think someone else could do the job better than you. Your options are basically to go it alone or hire a pro to oversee your finances.

Reduce your spending footprint. Increase your lifestyle and financial longevity.

Me, myself and I

There are definite advantages to managing your own portfolio. The obvious perk is that you don’t have to pay asset management fees to money managers if you’re doing it yourself. Thanks to the internet, you can have the same access to the markets in real time that the highest-priced brokers have. There are online tools that can help you assess your risk tolerance, walk you through setting asset allocation goals, help you research reports on any topic and track how your portfolio is performing.

However, going it alone isn’t all sunshine and puppies. There are risks involved. Should life intrude and hold your attention on things other than managing your investments, you could find yourself tumbling over a cliff before you see the danger coming. Those who go it alone also tend to shy away from safe retirement strategies, going with a more “go big or go home” attitude that doesn’t always play well when applied to money management.

Take your personal inventory

Before you make the final decision on who should manage your portfolio, take a hard look at yourself. Have a discussion with yourself, asking a few questions before you proceed.

Ask: Is it bigger than I can handle? If you’re a relatively low-level investor with limited investment funds, you can probably handle your portfolio with a few carefully chosen diversified mutual funds. If, however, you’re looking at a portfolio with a large sum of money – say, a half a million or so – you may be better served with a professional managing your portfolio.

Ask: What’s the limit on my risk taking? Generally, a more conservative approach proves to be the safer retirement strategy for growing investment portfolios.

Ask: Will my portfolio diversity shield me from market volatility? Reality in the world of finance shows that it is difficult for a solo investor to put together a portfolio of stocks, bonds and mutual funds that are diverse enough to protect you when the market takes wild fluctuations – which it will do.

Ask: Can I hold to my investment plan? Be honest with yourself. If you’re the type that cheats on a diet, you’re probably not going to stick to your investment plan.

Choose your route carefully

Regardless of the route you choose to take, make certain you do your homework first. With a little soul searching and some serious research, you can spare yourself a lot of headaches and heartaches in the future.

About Retire Early Lifestyle

Billy and Akaisha Kaderli retired two decades ago at the age of 38 and began traveling the world. As recognized retirement experts and internationally published authors on topics of finance and world travel, they have been interviewed about retirement issues by The Wall Street Journal, Kiplinger's Personal Finance Magazine, The Motley Fool Rule Your Retirement newsletter, nationally syndicated radio talk shows and countless newspapers and TV shows nationally and worldwide. They wrote the popular books The Adventurer's Guide to Early Retirement and Your Retirement Dream IS Possible.
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