Investing could be very easy as simple as opening a savings account if there is an online broker or very easy access to financial data.
However, in the world of the internet, it is do it yourself similar we have in investing exercise?
If it is true then why do you not fire your financial adviser or try to pay fewer fees and make your own to-do list?
Because of the internet, our lives have changed completely. A few years back it was not as easy to buy stocks as easy it is now.
In order to complete the execution of buying stocks used to go through a complicated network process or brokers. It has changed in 1983 when a dentist made the first-ever online stock transaction.
Is it a Great Idea to Manage Money by Yourself?
That process has changed now Investing products are being researched very well and discussed then bought & sold. Reasons being are computerized trading came into the picture and now it is very easy to buy and sell top most securities easily and quickly.
Now the same financial data is available for you exclusively easily and free professionals use an online portal like StockTwits made entire investor community & traders who all exchange their information in real-time.
But remember one thing that it possibly does not make sense that you should manage money by yourself. It is said that the stock market is a very costly place to learn how to start investing. The financial experts understand that it is easy to lose money than making money in the stock market if you are new to the stock market.
Financial tools are only beneficial if the person using them has sufficient understanding and knowledge to use them. Is it true that good composers using high-priced software can produce beautiful music or sound? Is a new invention in the medical make a person a top-performing doctor without prior training or exercise?
Without any doubt internet has given access to financial tools to retail investors they need to manage their own money but how do they use those tools without experience and knowledge adequately? Any individual investor who wants to manage money by own, Needs to know what all the fundamental things should be learned before they fire their financial advisor.
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The Modern Portfolio Theory
First and foremost they should understand MPT (modern portfolio theory) and gain some knowledge of how asset or wealth allocation is being done for each investor according to their needs or factors. Better if you want to get some true understanding you should dig deeper than just reading top-level articles or posts which tell you that MPT is just knowing the allocation.
Individuals need to understand that MPT is not all about knowing the allocation, but even the ability too to do well in investing. The topmost money manager understands or knows very well how to allocate your money to minimize risk and make a good return.
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Knowing or Understanding Risk Factors
In the excess of free available resources, the risk factor is treated as high. The individual retail investor thinks they understand the risk in investing can lose money from time to time, but it is much more than that. Dalbar Inc conducted a survey and showed that inexperienced investors tend to buy stocks at a high price and sell it at a low price.
Thought You will Beat the Market
Do you understand how imperfect you are to the overall markets? When someone is best at something they can’t be best for decades. You can find the answer in EMH (efficient market hypothesis). If a company discloses the information that its sales will be low for the quarter then the market will react and adjust the value of that stock accordingly.
Try to learn how to Invest?
Suppose when you have joined or started a job you were not so efficient than you got some experience and become perfect in your field the same goes here first you have to learn to invest or gain experience to become a perfect investor. At first, you have to lose some money in order to get experience in investing.
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The Final Word!
You can find people around you who have got success in investing, but before you start investing or managing your own money you should be a student of investing world in order to master investments.