How to Invest Without a Money Manager

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investment-checkerboardWhen people decide that it’s time to invest for retirement or simply grow their cash pile, it is a common assumption that one must have a money manager. However, many successful investors have flown solo. You don’t need to be a financial genius or Warren Buffett to expand your investments. You simply need to take the time, do the research, be aware of the market and make careful decisions. The reason many people don’t do their own investing and hire a manager is not because they can’t do it on their own, it’s because they just don’t have the time. It is recommended that an investor spends one hour per week researching every investment they have. If you have five different stocks, for instance, you may not have the extra five hours to spare to do this necessary homework. However, if you have the time and inclination, you can grow your own investments without having to pay a manager’s fee.

Stocks

Stocks are notoriously volatile. However, they are still where many people make a substantial amount of money. It pays to take a mixed approach when investing in stocks concerning risk. Stocks with riskier stories can bring in greater future rewards if these stories have happy endings. However, if the stock fails, losses can be significant. Many people prefer investing like their parents, with the buy-and-hold philosophy. The problem with letting stocks go on automatic pilot is that the market is more volatile these days, especially with automated trading. You have to check in with your stocks on a regular basis to know what the market is actually doing. The buy-and-hold strategy can create missed opportunities since it is better to sell the rips (when the stock rises suddenly) and buy the dips (when the stock falls suddenly) then just let it ride.

Your stock portfolio should be well diversified. Not only the type of stocks you hold but also in terms of risk. Avoid owning too many stocks in just one sector, because it’s not only the individual company that determines whether a stock rises or falls but, the sector it is in and the market in general. It’s a good idea, for example, to have a portfolio comprised of a packaged food company, a bank, a text stock, retail, and energy company. You should also diversify risk as a way of hedging an outcome. Only a few stocks have a high risk and high reward proposition, but, also have a few holdings that you know tend to be reliable no matter what the financial environment.

Precious metals

When the world ends, gold investors will be happy. This might seem like a hyperbole, but, gold is always a silver lining when there’s bad news. This is one reason why it is a good idea to have gold in every portfolio. This is because it is the one thing that tends to rise in price when there is a global catastrophe or a financial collapse. Many people also like silver and platinum, but, gold is the barometer of how other precious metals tend to go. People like gold in times of crisis when they feel uncertain about the health of their currency. It is a protection against world economic woes because it serves as a currency when other types of currencies fluctuate. This is one reason why gold prices rise when there is global panic. A good time to buy gold is when things are relatively quiet on the economic and world news scene. When there is a military conflict or the economy crashes that might be a good time to sell a bit of gold; unless you think that things could get even worse.

Real estate

Real estate was considered a great investment early in the 21sth century. That is, until the financial collapse of 2008. People who were able to buy real estate on the weakness of the housing crisis made the right decision. Although, people were weary of buying new homes for a while after the housing trauma. The advantage of purchasing real estate is that it is an investment you can use. The downside is that this can cause considerable wear and tear and depreciate the value of your investment. This is why it is a good idea to live in a home you own. This way you can oversee your own property without having to rely on a tenant to take care of it. Real estate investments may involve substantial attention and maintenance and a large amount of funding in various places. However, real estate is a highly lucrative investment vehicle. Especially if you invest in an area that suddenly becomes trendy. Nevertheless, as was seen in 2008, real estate can come crashing down unexpectedly. Although it is unlikely that we will see another crisis of that magnitude in the housing sector in the near future.

Bonds and treasuries

These are the ultimate safe investment vehicles and are favored by conservative investors. However, many people find them dull, and corporate bonds and treasuries tend to yield a much lower return than most stocks. However, it is useful to have some bonds in your portfolio, if only because they are sensible investments and will ensure that your money will still be around even if your stocks fail.

Forex

Forex trading has been all the rage, however, it can be risky and unfortunately, can attract impulsive investors. With the instability of world markets, especially in Europe, currency trading can be perilous. But, those who are currency mavens can really clean up in their investment. Beware of scams connected with Forex investing, promising miraculous returns if you just buy into a program. Become knowledgeable about the dynamics of currency and be prepared to pay constant attention to what is going on every day in world markets. Currencies can rise or fall on a dime so to speak, thus making them highly volatile.

If you’re motivated to put the time and effort into researching investments not only before you commit the funds, but while you are holding investment vehicles, you can enjoy success as an investor without having to hire a money manager. Be honest with yourself about the time you can spend on your investments and choose a diversified portfolio that will provide reliable returns.

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