A fund manager oversees investments and earns a nice salary for doing so. If you are invested in mutual funds, you are paying a fund manager to manage that fund for you.
But wouldn’t it be nice to be your own fund manager and control your investments yourself? You could spend your time creating your investment game plan and have an active role in reaching your financial dreams.
And the best part is that you don’t need a specialized degree to become your own fund manager. By following the tips I outline below, you can take control of your investments and reach your financial goals yourself.
4 Steps For How To Be Your Own Fund Manager
#1. Create Your Investment Plan
The first step in becoming your own fund manager is to take the time to create an investment plan. This is a critical step if you want to be successful when investing. When you try to invest without a plan you buy and sell random securities and at random times.
Fast forward a few years and you most likely made no money or lost money. You get frustrated and give up thinking the stock market is rigged. The problem though is that you never created an investment plan.
When you create an investment plan, you create a game plan to follow. You know what you are buying and for what reasons and you know when you should be selling too.
Think about it this way, no coach goes into a game without a game plan and calls things on the fly. They prepared a plan for the team to follow that they believe will lead to success. You too need a game plan or investment plan to increase the likelihood of your success too.
#2. Pick The Right Investments
Once you sit down and create an investment plan, you need to figure out the investments you are going to invest in. This is a multi-step process.
To start, you need to know if you will invest in stocks and bonds, mutual funds, exchange traded funds, or some combination of all.
From there, you need to pick your investments based on asset class and build out your asset allocation. If you are unsure of how much risk you are comfortable taking on, you can check out this great resource.
By picking the right investments and having the right allocation, you ensure that you will stay invested over the long term and not get caught up in the moment and cost yourself money.
#3. Monitor Your Positions During The Year
Even after your follow the above tips, your work as a fund manager isn’t done. You still need to monitor your positions throughout the year. This is because as the market fluctuates, your asset allocation will fall from your intended targets.
On the surface this might not seem like an issue, but the reality is, it is a huge deal. If your equity positions grow too much, your portfolio will become too risky for your tolerance and could cost you more money.
On the flip side, if your fixed income holdings become too large, then you risk your money not growing at the rate you need it to, forcing you to fall behind and potentially never reach your goals.
#4. Stay On Top Of The Market
The final tip to being your own find manager is to stay on top of the market. This means, to be aware of what is happening, but not get caught up in the moment. When you get caught up in the moment, you make decisions based on your emotions, like greed and fear. This ends up costing you money.
Instead, just follow what is happening in the market. Has there been a decline in the market and now is a good time to buy stocks on sale? Or maybe there is a new investment vehicle that has come out that will fit well into your portfolio?
Finally, maybe there are new tax laws and you need to make some adjustments to your portfolio to best take advantage of them.
Whatever the case may be, if you stay on top of the market, you ensure you will earn the best return you can.
At the end of the day, being your own fund manager is a perfect way to grow your wealth. You won’t be earning a six figure annual salary managing your investments yourself, but you will be taking an active role, which will ensure you grow your assets over time.
So take the time to follow these tips and you will be the best fund manager possible.