What It Takes to Manage Investments Well

Money for Life with Eric Roberge, CFP

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4+ y ago 25:56

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48: Lots of people think they're good DIY investors. But they miss a lot of nuance, and make a lot of mistakes. Here's what it really takes to manage investments well.

If you invested in the market over the last 10 years… it was easy to win. The markets climbed up and up, with the longest bull market in history running from 2009 to 2020.

Even a global pandemic wasn’t enough to keep the markets down in the spring of 2020. Stocks cratered and lost 30% of value in March — but had you not paid attention in the spring and only looked at market performance around August of that year, you might not know anything happened at all as the big indices hit record highs once more by late summer.

The real question, especially for DIY investors who have had success and see themselves as good at portfolio management, is this:

Will you keep seeing these same results going forward?

Knowing the mistakes DIY investors make, there’s no guarantee you’ll keep winning unless you know what pitfalls to look out for and avoid.

In this episode, we’re looking at the common areas in which average investors consistently misstep. We’re also sharing our perspective as professional investment managers on what makes or breaks a DIY investor.

The bottom line? Hiring a professional to manage your assets for you or going the DIY route are both good options. The right choice for you depends on precisely who you are and whether or not you have the skills, time, and expertise to avoid the mistakes we cover today.

Today, we’re looking at:

Why “investment management” is not just about asset allocation. (Yes, that’s an important component – but that’s barely the tip of the iceberg!)
What good asset management looks like, either when done by a pro or by a DIY investor (hint: investment management should be a complete process and a system – not a handful of to-dos to cross off a list. Good management is ongoing, proactive, and comprehensive.)
The killer mistakes we see investors make when they invest without guidance, including failing to eliminate cash drag, taking the “set it and forget it” philosophy a little too far, and failing to properly execute complex strategies like backdoor Roth conversions or making strategic tax moves within brokerage accounts.
How market timing will kill your returns, and why average investors tend to miss the best-performing days in the market.

And more. This is a big one, and a must-listen for anyone considering how they can better manage their own portfolio… or for anyone who doesn’t understand why you’d ever hire an investment manager.

If you think investment management is just asset allocation and picking an index fund or two, there’s a lot you might be missing. Get in the loop by queuing up this episode of the show.

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