11 August 2015

Pitfalls of Do-it-yourself Investing

No sane individual would contemplate to challenge a Chess Grandmaster or Tennis Pro but nearly everyone with money to spare thinks he can take on the investment professionals at their game. Not that they provide stellar returns - adjusted for fees the average money manager underperforms the indices against which they are measured. But studies demonstrate that individual investors that go it alone perform even worse - and by quite a large margin. Unfortunately this still leaves the investor with a major problem - how to find a good money manager. Results produced by the investment experts - be they investment or pension funds or private bankers - show a wide dispersion, even among the funds managed by the same firm. So careful selection of a suitable money manager is nearly as difficult as selecting the next hot stock or asset class.