Options for Managing Your Portfolio

We recently published a mini-series that focused on picking stocks and some tactics on how to do so. While the goal of that series was to educate new investors, some still might not feel ready to manage their own portfolios. The good news is regardless of your level of investing knowledge, there are options from the novice to the expert and everything in between. We are going to jump right it and let you know about three options to consider right off the bat: self-directed, professionally managed, and the new comer ‘robo advisors.’ We’ll walk through each in turn and you can determine which is best for you.


It’s your money, you earned it and know exactly how and where you want to invest it. If this sounds like you, you may want to look into self-directed investing. Rather than paying a financial manager, you would be able to trade stocks, bonds, funds and other securities on your own. The entire wealth of the world’s stock markets is open to you. With independence comes a lot of decision making and a lot of work. Without a professional helping decide where to put your money, you may want to brush up on your financial knowledge. You don’t have to be a stock market expert, but you should do your research. Learn about the market, the stocks you’re interested in and make a realistic plan.

Knowledge is a powerful tool! One often overlooked factor of hiring an investment manager is that it hinders your ability to increase your understanding of investing. This is especially significant if you plan on investing throughout your life because you will be continually gaining expertise in all things from the macro to micro spectrum of the market. By self-directing your portfolio, you may not find success immediately, but with time and practice you can learn to invest your money wisely while avoiding fees. Examples of these types of apps are DriveWealth, TDAmeritrade, E*Trade Mobile, and Fidelity. These are great for individuals who plan to increase their knowledge, but also want the support that a robo-advisor provides. Those users on a budget check out DriveWealth as they offer more flexibility by allowing users to invest through dollar amount versus purchasing a whole share.

Professionally Managed:

Want to get involved in the market but in need of some guidance? That’s completely ok, we aren’t all finance aficionados with MBAs and subscriptions to Forbes Weekly. Professionally managed portfolios, otherwise known as ‘active management’ means that your money is being handled by a professional or a team, who is turn make decisions on what investments to buy, hold, and sell. With this method you now have access to people who are dedicated to managing risk and minimizing portfolio calamity. They can also create an asset allocation made up of diverse classes that can custom fit your wants and needs. Nevertheless, with any investment, there are still risks. Just because you have a professional in your corner doesn’t mean you’re not susceptible to economic volatility as well as other unpredictable factors.

As we stated before, professionals can be a great option, but they come with a price. In order to better understand the cost of hiring a professional investment manager, here is a quick scenario. If your manager is earning you 10% per year on your investment, for a period of five years, but is taking 4% for his service fee, your real return is only 6%. This means that if your portfolio had $10,000 in it when the manager first took charge, you would realize about $13,382 over a five-year period, rather than the full $16,105 that you would have made if you were managing the portfolio yourself. Essentially, in this scenario, the investment manager is costing you $2,723 over the five-year period.

Robo Advisor:

Today, investors benefit greatly from the resources available to them thanks to the internet. Even if you have no prior knowledge in investing, you can find exactly what you need or, you can receive guidance while also having some control. This is especially true of tools like robo-advisors.

First thing’s first, what is a robo-advisor? A robo-advisor is a digital platform that provides automated financial planning services driven by algorithms, generally requiring minimal supervision by humans. Typically, robo-advisors function by collecting information from users such as their financial standing, future goals, and what level of risk they are comfortable with. It then uses this data to advise them and (or) make investments, automatically. Essentially, robo-advisors can provide you with a great balance between a self-directed and professionally managed portfolio. There are currently numerous different robo-advisors available, many you can access from your cellphone through their mobile apps.

Regardless of your level of investing knowledge, there are options for you. From professional investment management to self-directed portfolios and the happy medium of robo-advisory solutions, the entire wealth of the world’s stock market is only limited by you.