Nobody Cares About Your Money... More Than You!

Who should be running your 401K? If nobody cares about your money more than you, then why are people so quick to hand it off to someone else to manage? I personally think that a lot of it has to do with our school systems and the lack of financial education offered. Of course I was taught how to knit a scarf, cut open a frog and memorize many obscure poems to be recited to the class, but only a nickel's worth of education when it came to portfolio and financial management. In fact, unless you were a finance major in college or come from a family with experience in finances then you may find yourself in a similar position as myself, having to take the time to teach yourself this essential information. So is it even worth it or should you just hand it off to a professional?

Before I go any further, let me just say that many of you, especially those of you who don't have the time or inclination to do the research necessary to succeed, should not be actively investing in the market. You are probably better off just handing your money over to a financial advisor. Many financial advisors are very good at what they do and will help you reach your financial goals.

However, many good financial advisors often manage between 200 and 500 accounts, with total monetary values easily reaching into the seven, eight and nine figure range. With so many individual accounts to follow, advisors may only have time to open and evaluate your current positions once a week - hardly enough to maximize your returns. For many people a 10% yearly return will suffice, especially in difficult times.

As for me, I choose to take control of my finances. I do the research and actively manage my portfolio daily. The last two months I have seen a 17.6% return in this broad based market we have experienced. I know many private investors who annually see tremendous gains that no financial advisor I have ever known would be able to compare to. On the flip side, I have also seen many private amateur investors lose money in bullish markets and get wiped out in bearish markets.

With all this being said, I am not going to tell you either way is better or worse than the other. This decision varies greatly between individuals, their financial goals and risk tolerance. For me, I choose to try and aggressively grow my speculative money and conservatively grow my retirement funds. I feel my money is best suited in my hands. If I lose it, I know it is my fault. If my financial advisor loses it, he still gets his commission and makes money. Thus I conclude that nobody cares about my money more than I do. Do you agree?

5 Comments - Post your comment below.

Katie
Jan. 15, 2006

I think that I would have to agree. If you want anything done right you usually have to do it yourself--or at least put it in the hands of someone you really trust and watch it closely. While it is ok and often advisable to get an expert's opinion and help with your finances, the bottom line is that you are the one that will experience the actual gains or losses and have the most at stake.

Chad
Jan. 15, 2006

Very true Katie. I would also recommend individuals learn the ropes of investing before just diving into it. Take some time to practice with fake money and keep track of how you are doing until you feel comfortable enough to step up to the plate.

Jim
Jan. 16, 2006

Chad,

I see your point in trying to manage your money yourself, but most people simply do not have the time. When you have a full-time job, kids at home, Mother-in-Law always stopping by, and bowling or golfing when the season is in, there is just simple no time remaining to do all the research required to invest on your own. Example: Fast food joints. Everybody can certainly make their own meals, but people just dont have the time, therefore they buy it. It makes their life easy and saves them time (because they dont have the time to spend). Thats why fast food places make money, along with investment firms. Its a convience to have somebody else do it for you, and this society pays for convience!

Chad
Jan. 16, 2006

Jim, I couldn't agree with you more. We live in a culture that is built around convenience. Convenience, however, doesn't necessarily translate into the best decision. This is the case when deciding to cook a healthy meal yourself that takes an hour to make or picking up fast food to eat in five minutes. I think when it comes to investing however; it’s deeper then just convenience. Not only is it convenient for some people to have others invest for them, but in many cases it is also a very smart decision and one that will probably net them more income in the end.

Paul Caspersen
Feb. 11, 2009

Most "Personal Finance" gurus state that nobody cares about your money more than you. This indirectly says you can trust others which is ridiculous. More importantly I guarantee that everyone at some point will not be at the mental capacity to handle their finances. Personal finance people on TV only care about ratings. Thus you don't need them if you have a good advisor and they don't like that.