• About
  • Mortgage Basics
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

How to Save Money by Managing Your Own Investment Portfolio

By Enero Febrero

investment portfolioIf you’re in the fortunate position of having a large amount of cash in the bank, you might be considering using some specialist advice such as a financial adviser. There are certainly advantages to this move — not least of which is the fact that financial advisers can provide a full overview of what the market can offer and take much of the stress out of investing.

However, lots of people choose to go down the self-management path rather than hire a financial professional — and for equally valid reasons. Sometimes it can be prohibitively expensive to hire someone, while others enjoy the thrill and satisfaction of a self-managed portfolio.

Here are four key steps everyone should follow if they want to go about achieving financial autonomy by managing their own investments:

Do your research

This first tip can’t be stressed enough. Doing your research and finding investment information is an integral part of managing your money! If you don’t, the best case scenario is that the value of investment will take a temporary knock — and the worst case scenario is that your money will be wiped out due to an avoidable error that a financial adviser would have spotted. Everything from reinvestment time frames to compound interest and from fraud prevention to percentage calculation-formulas will need to be learned if you’re self-managing — so it’s time to get studious!

Remember the role of inflation

Many people who choose to manage their own savings either start out or ultimately end up opting for cash savings, or simply leaving it in the bank. There’s an appeal to this strategy, especially if you’re a risk averse person who might feel stressed out at the thought of your savings getting wiped out. However, financial advisors usually would not recommend doing this, and that’s because it can actually cause your savings to go down in value.

Say you leave $100,000 in a bank account for a year, and it earns 1% interest. Technically, you’ll have $101,000 at the end of the year; but if inflation has risen in the meantime, it’s entirely possible that that $101,000 can now only buy you what used to be $98,000 worth of goods and services! As a result, a growth strategy which offers some defense against inflation is wise. There are some relatively low risk products out there which offer enough growth to counter inflation, and the Internet can help you to find out which providers offer these.

Set your goals

Financial advisers provide many services, but one of the most important strategic ones is goal setting. Making financial decisions which don’t fit your goals is, of course, not wise, but the problem that many people face is that they don’t know what their goals are to begin with. Say you’re thinking about purchasing a home in the future: saving your cash in a volatile fund which might need years to recover from any market gaps is a bad move because it may not rise in value again by the time you need a lump sum for a down payment. If you’re self-managing your savings, you’ll need to do this goal setting on your own. Speaking to your partner, family members or other loved ones is a good starting point, while thinking about your employment prospects and plans is also essential.

Keep your eyes peeled

It’s a sad reality that fraud is everywhere in the financial markets. Whether you have a financial advisor on side or not, you’ll never be able to defend yourself entirely against the risks of fraud. However, financial advisors have years of experience, and they can often spot a scam a mile away. As an autonomous investor, you’ll need to do your due diligence yourself.

Before going ahead with an investment, you should always learn as much information as you possibly can about it. Running it through the search functions on websites such as those of the Securities and Exchange Commission, or the Commodity Futures and Trading Commission, is a good way to see whether or not it’s been blacklisted by other providers, while if a promised rate of return seems too good to be true then it probably is!

Self-managing your money might seem like a scary thing to do, as removing the protective layer of a financial advisor means you’re instantly more vulnerable. However, it’s certainly possible to get the benefits of saved fees by managing your savings yourself: all it takes is a bit of research, a strong dose of goal setting, and an awareness of the risk of fraud.

Photo Credit: reynermedia

20 Comments May 23, 2019

Comments

  1. 1

    John says

    Weve been doing our own planning for over 50 years now, and have a nice nest egg built up. One of the best ways to get an education is to subscribe to American Association of Individual Investors a non-profit. At only $99 for a four year subscription it is an absolute steal.

    Reply
    • 2

      Len Penzo says

      Great idea, John! Thanks for the tip!

      Reply
  2. 3

    Karen Kinnane says

    If a “financial adviser” is all that good, why would he be managing your (or my) relatively small amount of money? Anyone really great would be swamped with offers of work from the ultra rich.

    Look at the poor performance of managers of some hedge funds which have done abysmally in recent years, and they are supposed to KNOW. Except for those fortunate enough to be able to do insider trading because they get information before the average person, I don’t think that I need a financial adviser.

    1. Spend less than you earn, max out matching retirement account at work.
    2. Open ROTH IRA immediately and fund if eligible or if you make too much money open traditional IRA.
    3. Pay off credit cards every month.
    4. Prepay on your home mortgage. BUY a home in a good location if you’re going to stay in area five years or more.
    5. Buy dependable dividend producing stocks in your retirement accounts and set them up as DRIP accounts so all dividends are converted at no charge into more of the stock.
    6. If the market goes really low buy additional stock. If it swings really high, sell SOME of your stock, repeat.
    7. Have an emergency fund and always live below your means.
    8. Read, study and follow ideas in “The Millionaire Next Door.”

    There, you’ve just been saved from hemorrhaging money to a financial adviser, GO AND PUT THE SAVED MONEY INTO YOUR RETIREMENT ACCOUNT! And you don’t owe me anything for a sound financial plan!

    Reply
    • 4

      Len Penzo says

      Great tips, Karen! Thank you, as always, for sharing your thoughts.

      Reply
  3. 5

    Eve says

    What a stuff of unambiguity and valuable experience regarding unexpected feelings!

    Reply
    • 6

      Len Penzo says

      Thank you, Eve! I think.

      Reply

Trackbacks

  1. Why You May Want to Consider an Investment In Online Casino Stocks – Len Penzo dot Com says:
    July 25, 2019 at 2:15 am

    […] millions. So, imagine if you had shares in a business that was responsible for this? If you manage your investment portfolio, online casino stocks may, therefore, be an attractive […]

    Reply
  2. Are Financial Advisors Worth It? (Plus an Alternative) - Universe News Network says:
    October 6, 2020 at 4:20 am

    […] have shown that these unnecessary changes to your portfolio usually lead to a long-term decline in returns. For instance, Vanguard showed that investors who […]

    Reply
  3. How Socially Accountable Investing Is Reshaping Wealth Creation - Venture News says:
    November 13, 2020 at 4:52 pm

    […] you’re extra of a DIY investor, you possibly can at all times simply purchase your personal ESG ETFs in a brokerage account. There […]

    Reply
  4. How Socially Responsible Investing Is Reshaping Wealth Creation - Way Out Of Rat Race says:
    November 13, 2020 at 5:24 pm

    […] you are more of a DIY investor, you can always just buy your own ESG ETFs in a brokerage account. There are over 200 ESG ETFs (and […]

    Reply
  5. How Socially Responsible Investing Is Reshaping Wealth Creation – FINANCEABC says:
    November 13, 2020 at 7:03 pm

    […] you are more of a DIY investor, you can always just buy your own ESG ETFs in a brokerage account. There are over 200 ESG ETFs (and […]

    Reply
  6. How To Pick The Best Mutual Fund | Virtual-Strategy Magazine says:
    December 13, 2020 at 9:19 pm

    […] it comes yo different types of management, there are two prevalent ways. You must determine whether you want your funds passively or actively […]

    Reply
  7. What Is a Brokerage Account and How Do I Open One? - Way Out Of Rat Race says:
    January 1, 2021 at 3:23 pm

    […] hand is a hybrid, allowing you to fully automate your investments. But it also allows you to build a custom portfolio to your […]

    Reply
  8. What Is a Brokerage Account and How Do I Open One? – FINANCEABC says:
    January 1, 2021 at 7:00 pm

    […] other hand is a hybrid, allowing you to fully automate your investments. But it also allows you to build a custom portfolio to your […]

    Reply
  9. What Is a Brokerage Account and How Do I Open One? - says:
    January 1, 2021 at 8:07 pm

    […] permitting you to completely automate your investments. Nevertheless it additionally permits you to Construct a customized portfolio As in line with your […]

    Reply
  10. What Is a Brokerage Account and How Do I Open One? – NttConsultants – Crypto, Tech, Finance & Business News says:
    January 2, 2021 at 12:07 pm

    […] other hand is a hybrid, allowing you to fully automate your investments. But it also allows you to build a custom portfolio to your […]

    Reply
  11. PRIORITY $$ Habits for Successful Investors $$ - South Florida Reporter says:
    January 18, 2021 at 3:54 pm

    […] may be easier to stick with your plan for the long-term if you have a portfolio that that has growth potential. This will make it easier to persevere in the long run. While […]

    Reply
  12. Four Ways Technology Helps the Hesitant Beginner Investor - ABC Money says:
    January 27, 2021 at 6:18 am

    […] Holding a stock portfolio used to be reserved for those with sufficient resources to be of interest to a brokerage firm. These firms couldn’t afford to spend time with clients if the fees they generated from them didn’t justify it.  In the past, the infrastructure required for trading meant employing a large staff and paying for premises to house them.  All that, in addition to the cost of complying with demanding regulatory requirements.  […]

    Reply
  13. 7 Ways You Can Save Money with Tesla’s Solar Roof – Hate My Fat says:
    February 1, 2021 at 6:27 am

    […] think about what you can do with an extra $130 a month! If you just passively invested the savings wisely, you can potentially grow it to tens of thousands of dollars over the course of […]

    Reply
  14. 3 Ways Betterment Helps You Invest - Kenyan Wallstreet says:
    February 20, 2021 at 6:24 am

    […] your money work for you, right away! With Betterment, you manage your own investments, avoiding financial advisor fees which will save even more […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Polls

Have you filed your taxes yet?

View Results

Loading ... Loading ...

Recent Posts

  • Black Coffee: Stuck in a Tangled Financial Web
  • A Few Thoughts from Aunt Doris: How to Make Ends Meet
  • Grandfather Says: Happiness and Living in the Right Mold
  • How to Get a Good Job Without a College Degree
  • Clever Ways to Save Money On Your Next Car
  • 18 Fun Facts About Money That You Probably Didn’t Know
  • Black Coffee: More Pie In the Sky
  • How to Get Fast Approval on Installment Loans
  • Should You Consider A Pre-Settlement Loan In a Personal Injury Case?
  • What Barfing Out of a Bus Window Teaches Us About Managing Money

Disclaimer

This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. In fact, making investment decisions based on information published here, or any other website for that matter, is more than unwise; it is folly. This website accepts advertising in the form of monetary and other compensation; as such, topics of discussion are occasionally influenced by these advertisers. Sometimes, an article may also include affiliate links, meaning, at no additional cost to you, this blog earns a commission if you click through and make a purchase (for example, as an Amazon Associate I earn from qualifying purchases). Remember, you and you alone are responsible for the decisions you make in life, so please contact an independent financial professional for advice regarding your unique personal situation.

Sign up for the weekly Len Penzo dot Com newsletter
Len Penzo dot Com Delivered Weekly
Join more than 30,000 readers and fans who enjoy personal finance and macroeconomics with an offbeat twist!
Invalid email address
Thanks for subscribing!

Popular Now:

  1. 1. 25 Examples of Shrinkflation That No Longer Fool Consumers
  2. 2. The 10 Worst Things I Ever Bought
  3. 3. 7 Perplexing Money Questions Without a Good Answer
  4. 4. My Cola Taste Test: Is Coke Really Better Than Pepsi?
  5. 5. The Real Secret to Becoming Rich as a King
  6. 6. Planning a Wedding? Here Are 9 Ways to Ensure You’ll Pay Too Much
  7. 7. Economic Collapse 101: How to Prepare for Water Supply Disruptions
  8. 8. A Simple Test to Know If It’s Better to Rent or Buy a Home
  9. 9. The Big Secret the Banking Industry Doesn’t Want You to Know
  10. 10. 4 Good Reasons Why Some Quarters Are Painted Red

All-Time Most Popular:

  1. 1. 19 Things Your Suburban Millionaire Neighbor Won’t Tell You
  2. 2. Dear Friend: Here Are 41 Reasons Why I’m NOT Lending You the Money
  3. 3. Why Your Expensive Luxury Car Doesn’t Impress Smart People
  4. 4. If You Can’t Live on $40,000 Annually It’s Your Own Fault
  5. 5. 21 Reasons Why Corner Lots Are for Suckers
  6. 6. 4 Smart Reasons Why College Isn’t for Everyone
  7. 7. 18 Fast Facts About Social Security Numbers
  8. 8. My Ketchup Taste Test: Upset! Guess Which Brand Topped Heinz
  9. 9. Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
  10. 10. Here’s a Simple Trick for Getting Credit Card Interest Charges Waived

Copyright © 2021 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2021