Invest the way that suits you best
INVEST the way that suits you because if there's one thing experience has taught me, when something becomes too hard or too time consuming, we're more likely to give it away.
Your attitude to money can shape the way you choose to invest.
Some people have a keen interest in building a vast pot of money for its own sake. For others, money is all about what it provides - the ability to make choices about how you live your life. We all need to eat and pay bills, but money lets us enjoy the fun stuff like family holidays and personal hobbies be they golf, surfing, or, in my case, sailing.
Another place we are all different is whether money is a passion or just a vague interest.
You may for instance, be fascinated by the process of selecting shares. But that is too time consuming for others, myself included.
If you love to spend a heap of time researching the sharemarket, good on you. I am quite happy to hold shares like BHP individually, but to be frank I have neither the time nor interest in keeping an eye on the shares of the future - small companies, which may become big companies in time. Nor would I pretend I can select and manage international shares without a lot of time and effort.
This is what I love about managed funds. Of course, I want exposure to all these shares. And a professionally managed share portfolio lets me get the benefit of these investments while I am out sailing. How good is that?
Fees are a drag on investment performance, so this is something to watch for with managed funds. But it's the same if you go for DIY. The cost shouldn't just be measured in terms of direct expenses like brokerage.
You also need to work out the time you spend managing your investments (tax time can be especially challenging when either you or your accountant sort out your tax position).
The bottom line is, if, like me, you want to do some direct investing yourself and still use professional fund managers, no problem. If you want professional managers to do it all for you, again, no problem.
It's all about investing in the way that suits you best. And it doesn't have to be hard.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.