How does your investment portfolio look like? Do you manage your own, let professional manage or even both? Personally, my investment portfolio is split between both self-managed & professional managed with a ratio of 80% & 20%. I like to have full control of the stocks I want to buy but at the same time, my experience of investing in foreign stocks is zero. That is the part where I have to rely on professionals to help me with my investment. A self-managed investment portfolio is highly linked to individual stocks that you are purchasing & professionally managed investment portfolio usually linked to investment such as mutual fund, PRS, or hedge fund.
What Are The Pros & Cons Of A Self-Managed Investment Portfolio vs A Professionally Managed Investment Portfolio?
Self Managed Investment Portfolio
Pros:
1. You Are In Control
Whether your investment is profitable or not, it fully depends on the stocks that you purchase. If you have done enough studies on the company you want to invest in, most probably you can make a good return but if you rely on hearsay, your investment may be unprofitable.
2. You Are Part Owner Of The Company
As part-owner of the company, you will have voting right for each year AGM for some of the key items that will be brought up during the AGM. If you are the top shareholder of the company, your name will be listed in the Annual Report.
3. You Can Save Money From The Fund Annual Fee
When you buy an individual stock, you only pay the Brokerage Fee & other fees which is one-off while Professional Managed Investment Portfolio, will have the Annual Management Fee, Load Fee & miscellaneous fees.
Cons:
1. Your Experience
Investing may or may not be our major. When we invest, our way of deciding which stocks to buy may be different from decisions made by professional fund managers. It can be a good or bad thing as well.
2. It Can Be Time Consuming
Searching on which stocks to invest in can be a time-consuming task. If you are busy & have a hectic schedule, surveying which stocks to buy can be quite tedious.
Professionally Managed Investment Portfolio
Pros:
1. You Have Experts Managing Your Investments
All you have to do is to invest your comfortable amount & let the professionals handle your money.
2. You Get To Save Time
You can either get the professionals to recommend the fund to you or you can select your portfolio based on your investment criteria. It is way easier comparing to investing in an individual stock.
Cons:
1. You Are Not In Control
If you are buying Mutual Funds, you can only narrow down to a few selections such as sectors, countries, risk & others but at the end of the day, you can’t decide which stocks to buy. The professionals will do their part to ensure your investment is profitable.
2. High Fees
In Malaysia, some Mutual Funds charged up to 5% for the Load Fees. On top of that, you have to pay for the Annual Management Fee & also other hidden fees which can take up to another 5%.
3. You Are Not The Official Shareholder Of The Company
If you are investing via professionally managed funds, you are not the owner of the company. You cannot attend the AGM or have any voting right.
Conclusion :
The above are the pros & cons of both self-managed investment portfolio versus professionally managed investment portfolio. If both portfolios are not something you are looking into, there are also other options that you can explore such as Index Fund or Robo-Advisors. Both offer low Management Fee as they are not actively managed fund. Index Fund usually focuses on the whole market such as S&P500 whereas Robo-Advisors investment is purely based on data, not individuals. These factors help investors to save money as there are not many resources needed to manage the funds. Since Malaysia does not offer any Index Fund, the closest to replace Index Fund is ETF. You can buy ETF with your current Brokerage Account. Another way you can invest in ETF is via StashAway but you cannot choose the individual ETF. StashAway is also a good platform for Robo-Advisors. I’ve been using them for years & their platform is amazing.
If you are keen to try out StashAway, you can use my link where you will enjoy 50% off their fees for the first 6 months. Isn’t that amazing? All you need is 15 minutes of your time to register & answer the questionnaire & you are good to go. Don’t forget to set up the Auto Debit option so you can invest with them consistently each month.
OSS!
