The stock market provides unlimited investment opportunities. But what is the best way to manage your investments – trading direct buying your own stocks and shares or investing into a managed fund which is looked after by the fund manager. This article looks at the pro’s and con’s of each.
Many people are now getting involved in online share trading as a way to lower their commission fees and experiment with stocks. While this can prove financially rewarding those with little experience in the stock market could find this a risky strategy. Some financial gurus are recommending a safer option of managed funds for those with little experience in the stock market. It is important to do background research into the difference between managed funds and direct share investing and work out what is the best investment for you.
The simplest way to access the stock market from home is usually through online brokerage websites, but this can have its disadvantages: those looking to make a substantial return on investment will need a large amount of money to start. You will also need knowledge of financial markets and do background research into stock markets trends. While some people may thrive on the independence that online share trading offers, it’s very easy to lose money, as you’re competing with professionals who have worked in the stock market for several years. Many at home day traders may find that the amount of research needed into share trends and smart investments will offset any financial gain made. But like all things that are risky, the pay-off from making smart investments can be worth it.
Another option for novices in the stock market is investing in managed funds. This allows experts to join your money with other investors, and make decisions in your best interest. Managed funds often are a more popular choice for stock market beginners, as you can still choose what investments you’d like to make, but under the guidance of an experienced professional. Options such as managed funds can broaden your investment opportunities. Using these investment methods can open doors, such as investing in commercial property which most individual investors would not have the opportunity or funds to be able to do. However, with little risk comes little return; you’re much less likely to reap as many financial rewards as you would have through direct investing. Additionally, management fees can be expensive, which is a turnoff for clients who only want to make a minor profit. But for those who are novices in the stock market, it’s often a better choice to learn from an experienced day trader, as opposed to going it alone.
Of course, when it comes to choosing the right method of investment for you, it all boils down to what your expectations are. If you’re a knowledgeable day trader and have the know-how of stock market trends, you may be able to get away with paying the fees associated with managed funds by making savvy investment choices, compared to a beginner. For those with little experience of share trading and stock market investments it may be a better option to get guidance from a managed fund run by professional day traders, compared to doing it on your own.
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