Investment Management Strategy
Investing is a very daunting venture. For a person who is just starting out, it can be scary and uncertain, but it’s great to know that even in the midst of uncertainty, it is possible to succeed and investing is a worthwhile venture. Before you start, it is important to put into play a sound strategy when creating a firm foundation that would launch you to success in this field. Determining which strategy to use is very important as it will affect the outcome of your investments.
There are two basic models that can be employed when managing your investments. You can decide to be a Do-It-Yourself (DIY) Investor or Client-Advisor Investor.
A DIY investor model is one where the investor builds and manages their investment portfolio themselves. Basically, the individual does all the research, creates his own risk profile analysis, determines which type of investment he would like to purchase and generally makes all the decisions. The use of this model has been increasing in recent years with the advent of online investment tools and discount brokerages and the desire to save on fees. With discount brokerages, the investor does not pay management fees. A DIY investor generally would get a higher rate on return if he is confident and knows what he is doing, as he would save on advisor fees.
In a Client – Advisor model, the investor employs the services of a financial advisor, to manage and give advice about his portfolio. A financial advisor is one who determines an investment portfolio for his clients, taking into account a whole lot of information about the client and the economy which includes changes in regulations, economic trends, knowing the clients risk tolerance. An advisor should be trustworthy, respond well to the client’s questions and concerns and make his client comfortable.
The Client-Advisor model is beneficial when you are testing out the waters in the investment world you would need someone to guide you and act as a mentor, although this would cost you more as you would have to pay advisor fees.
The strategy you use should be well thought out. When choosing an investor, know your goals, what you what to achieve and what kind of risks you are willing to take? Devote quality time to meet and talk with your advisor, always have questions ready with you to ask, be sure that your investor is willing to work with you and has your best interest at heart. For me, I prefer starting out with an advisor and slowly working towards a DIY model.