Broker/adviser, or do it myself?

hi
i'm a beginner and i'm thinking of investing say 15- 20k in shares and growing it (will put the money in gradually when i'm ready to buy more and more). i don't make much money (trying to get a job, but got disability issues), so my income might not be much. i plan to keep adding my money into shares to accelarate growth. if i study it all - been reading and learning heeps - can i expect to do a decent job of it myself, or will i get much better performance if a professional (adviser or broker) does it all for me and picks out all the shares and amounts. i'm looking for an aggressive approach to shares, but carefully managing my risks. or maybe the total price for him to do it will be too much -a few $1000?- and because of that i'm better off doing it myself, as i'm willing to learn alot and spend the time. i'm aiming for solid returns each year (10-15%? or something). your advice is much welcome, as i'm wondering what kind of benefits or cons there are to getting a pro to do it all for a beginner like myself, rather than me doing it all.

much thanks

grah33 said:

hi
your advice is much welcome, as i'm wondering what kind of benefits or cons there are to getting a pro to do it all for a beginner like myself, rather than me doing it all.

Click to expand...

The benefits of doing it yourself:

• Complete Control
• No Fees
• It will force you to continue your learning and education process
• Self-satisfaction

The cons of doing it yourself:

• No-one to blame when you make a mistake/take a loss
• Stress
• It takes time to learn and become a better investor
• It takes time to research companies and form an opinion

I think that most people have the ability to become quite good investors, the question is: are you willing to put in the time to become good. If you find an interest in this area, your chances are vastly increased.
Good luck with your decision.

grah33 said:

hi
i'm a beginner and i'm thinking of investing say 15- 20k in shares and growing it (will put the money in gradually when i'm ready to buy more and more). i don't make much money (trying to get a job, but got disability issues), so my income might not be much. i plan to keep adding my money into shares to accelarate growth. if i study it all - been reading and learning heeps - can i expect to do a decent job of it myself, or will i get much better performance if a professional (adviser or broker) does it all for me and picks out all the shares and amounts. i'm looking for an aggressive approach to shares, but carefully managing my risks. or maybe the total price for him to do it will be too much -a few $1000?- and because of that i'm better off doing it myself, as i'm willing to learn alot and spend the time. i'm aiming for solid returns each year (10-15%? or something). your advice is much welcome, as i'm wondering what kind of benefits or cons there are to getting a pro to do it all for a beginner like myself, rather than me doing it all.

much thanks

Click to expand...

Hi Grah, welcome to the forum.

There are a few issues with what you're aiming for that would make it difficult to rely on the advice of someone who has to take risks in providing that advice.

I would have to say that it would be difficult to find an adviser or broker to take interest in a client with 15k to 20k to invest that doesn't have a high income to back them up and grow (add to) the sum invested quickly. The reason is exactly what you identified - the fee to do it would be unreasonably high for that amount of money. Unfortunately it is a business full of people that can't always help those that need help, as the red tape makes it expensive beyond the reach of average Australians.

The second issue, beyond cost, is your expectations of returns above 10% p.a. and the conflicted statement of being aggressive but carefully managing risk. Most financial advisers aren't 'stock pickers', and those that claim to be you should be wary of. An aggressive stock portfolio is going to be volatile. You can manage certain risks by diversifying into a range of stocks or asset classes but that is going to dampen your returns.

You are not likely to get the kind of advice or education you are looking for from a financial planner. Your best bet is to educate yourself by continuing to read and learn, start slowly with some of your funds, and continue saving.

You might want to consider putting a portion of your funds into an index fund or ETF. It would give you the experience of being invested, and as you learn and identify companies that you would like to invest in you can add them to your portfolio.

Good luck with what you choose to do. The important thing is that you've chosen to do something - that's a leg up on most!

grah33 said:

hi
i'm a beginner and i'm thinking of investing say 15- 20k in shares and growing it (will put the money in gradually when i'm ready to buy more and more). i don't make much money (trying to get a job, but got disability issues), so my income might not be much. i plan to keep adding my money into shares to accelarate growth. if i study it all - been reading and learning heeps - can i expect to do a decent job of it myself, or will i get much better performance if a professional (adviser or broker) does it all for me and picks out all the shares and amounts. i'm looking for an aggressive approach to shares, but carefully managing my risks. or maybe the total price for him to do it will be too much -a few $1000?- and because of that i'm better off doing it myself, as i'm willing to learn alot and spend the time. i'm aiming for solid returns each year (10-15%? or something). your advice is much welcome, as i'm wondering what kind of benefits or cons there are to getting a pro to do it all for a beginner like myself, rather than me doing it all.

much thanks

Click to expand...

my two cents, for what it's worth.

If you want to get someone else to manage your money, might as well buy the lowest-fee index fund, and leave it at that.

A financial advisor would look at your 20K, probably sneakered at it and charge you a couple of grand, recommend a couple of products like insurance, and split the rest into two Managed Fund anyway - one for "stability", one "growth".

There's Fund Managers who look after rich people's money, private client they call them. Rich is defined as having a couple of millions to invest. Most of us do not have the privilege to be charged 1 or 2% annually no matter what, that and charge a further 20% if by their talent the fund does better than some benchmark.

For my money, I'd do it myself. Especially when you say you have to time and willing to learn. It's your money, why else would anyone else care for it, or care for it more than you do?

The con of that:

1. You have to know what you're doing. This takes a lot of time, effort, lots of learning and more than a couple of mistakes along the way.

2. Three or four big mistakes could wipe you out. So play safe. Stick with top 100 companies t start with, then only use money you do not need in the near future - say one or two years...


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The Approach as I understand it:

Approach investing in stocks as you would in investing in a business - because that's what stock really represent. So focus on understanding the business, know how to read its financial statements, stick to the big boys first just for extra safety, and that's pretty much all there is to it.

If you decide proffessionals: brokers/advisors = avoid. They get their fees whether you make money or not. Look for fund managers with at least 3+ years (preferably more) of history/performance, although as others have said you will have some trouble with that amount of capital.

An alternative is use an "underground" trader. Something like RAPA Cap Intro, Collective2, Fund Seeder or similar. Google them you will get an idea of what they are. They have less instituitional backing but there are some great traders there too for less fees. I actually prefer this approach than the traditional funds as you have visibility/control of your account and can liquidate positions anytime.

If you decide to do it yourself, I beleive you have some odds on your side because of your disability. I know some great traders with disability. Maybe because they have greater preserverance/harderworking/less self esteem/importance(I apologise if this is not the case..it's my assumption) which actually makes them great trading personalities.

You can go down 3 paths, you learn, learn, learn and no doubt make a few mistakes along the way or 2, you use a respected and trustworthy financial advisor or thirdly, use low cost ETF and either just monitor them or leave your money there for a few years as you learn all about investing, think it’s a very untouched subject in so far as it takes years to learn, yet there are many would be services that make it sound so so easy.

I went with option 3 and have a portfolio of ETF and then spend time learning as much as I can without having my money at risk, if/when I get proficient at it them will maybe try my luck.

With ETF a few I use and I think offer a one stop shop to cover just about everything are SYI (ASX High Div shares), VAS(ASX Shares) VGE (Emerging Markets), VAP (Property) , IAF(Bonds), IOO(International shares), WDIV(International High Div).

Good hunting

Give Nick Radge at " The Chartist "
a call.
In expensive
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25 yrs experience
Proven track record.

I'm a member.

I'm just wondering if grah is trying to distinguish between full service broker and online broker.
When he says "do it myself" presumably he means using an online broker.

Some full service brokers are OK, some are not. Difficult for you to tell when you don't know what you don't know.
Certainly they will charge you many times the brokerage that you'll pay for the same trade via online broker on the basis that you are receiving the benefit of their expert advice built into that brokerage. Would be OK if it were reliably true.