Your investment portfolio – DIY or get a Pro?

If you’re dabbling in the world of investing and want to take the next step, grow your investment portfolio and see some real results, we’ve got a path through all the noise. Read on to gain some insights on how or when to involve a fund manager.

Do you need a fund manager for your investment portfolio?

This question, and answer, are very unique to you and your family, depending on your financial goals, your time for investment research and your inclination to do it all yourself. Retail investing has boomed in recent history. Meaning it’s relatively safe, simple and cost-effective to build your own investment portfolio with mutual funds, ETFs, stocks, shares and more. (See a synopsis of these investment types here) But the drawback to a DIY approach is that you need to commit a significant amount of time and energy to reading, research and fully understanding the investment space. Not to mention the investing jargon!

If you’re wary of the time and dedication it might take to keep your investment portfolio on track, and you have a pretty sizeable portfolio of assets to invest, it’s a good idea to think about turning to a professional fund manager.

Before you do that, we’d suggest you first know these things

1. Know your values

At Wealthstack, we are convinced that your values determine the ways you will spend money, save money and invest money [link]. Be sure to have a solid foundation of values that you can build your financial wealth on.

2. Know your objectives

When you know WHY you’re investing, it informs HOW you’ll invest. Whether you’re investing for retirement, saving to pay for college education or anything else on the spectrum, understanding your goals and objectives will help you and your fund manager plot a reliable path forward. Your goals will also determine your aptitude for risk and volatility, and the best makeup of your investment portfolio.

3. Know your Investible Asset portfolio

You and your family probably have a number of assets – things like a house or a car. But for obvious reasons, you can’t invest a car on the stock market. Your investible assets are wealth that you can invest into the market, for example, cash, bonds, GICs or other financial instruments. Any fund manager is going to first look at the size of this portfolio before going anywhere.

How do you find the right fund manager?

Now that you’ve got the basics in place, and you’re ready to entrust your investment portfolio to a professional, how do you make sure you’ve got the right one? In this field, alignment is everything.

When choosing a fund manager or investment firm, consider these important elements:

1. Philosophy

Is there alignment in how you think about money and how you want your money managed and the philosophy of your fund manager and their firm? Dig deeper to understand how the firm achieved its returns, and if that matches your values on money and investing.

2. Track Record

What does the history and success of the fund manager’s firm look like? Can you see how they achieved their results and have they been around for long enough to prove it?

3. Active Management

If you’re going to pay a fund manager to be at the helm of your investment portfolio, you want to make sure that their style is not to invest in, say, 300 stocks – because that just starts looking like a market ETF instead of a curated set of investments backed by conviction and philosophy.

4. Fee Structure

If your fund manager cannot easily and succinctly explain the fee structure – how much you’re paying and for what – then they are not a good fit for you. The best kind of investment firms have a transparent and easy to understand fee structure – choose them.

5. The keeper of your assets

In this digital age, money tends to become a number on a screen. But when you’re investing, your money and assets are actually held by a custodian. A custodian is a type of bank or trust that’s regulated and mandated to hold client assets such as stocks, bonds and cash. Knowing exactly where your money is and how it is structured is very important. Get this information from a potential fund manager, and make sure you’re comfortable with the answer.

6. Reporting

Double check if the reporting you’ll receive from your fund manager is easily accessible and customized. Otherwise, you may as well invest in a mutual fund or ETF that releases a simple fact sheet applicable to everyone. If you’ve got a fund manager in place, you’ll want to be sure you’re getting personal, tailor-made reports on your investments.

Investing is filled with nuance, style, personal preference and risk. It’s always changing and evolving. You don’t have to navigate it alone – you can get the right partner that will look out for you and help you grow your wealth and asset portfolio.

As we’ve mentioned, there’s a whole lot more to investing than just buying and selling of shares. We’ve covered way more detail on fund managers, investing and other really great insights in this podcast episode. We hope you’ll take a listen to get a more holistic view of choosing the right fund manager too.