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3 Signs That Show You Might Need Someone to Manage Your Money for You

Taking charge of your own investments can be fun and very financially rewarding. Unfortunately, it is not a path for everyone. Here are three signs that you might be better off leaving your investing activities to someone else:

1. You get stressed when looking at your losses

It can be exciting if you have been able to spot multi-baggers like Jardine Strategic Holdings (SGX: J37), Genting Singapore (SGX: G13) or Singapore Exchange (SGX: S68). Those three shares have seen capital appreciation of more than 14% per year on average since the start of 2004.

However, it can also be extremely painful to have invested in companies like Singapore Airlines (SGX: C6L) or Neptune Orient Lines (SGX: N03), which have seen their prices fall by a total of 6.6% and 54% respectively over the same span of time.

Share

Price: 1 January 2004

Price: Today

% Change

CAGR

Jardine Strategic

US$4.1

US$36.29

785%

23.1%

Genting Singapore

S$0.22

S$1.35

614%

18.9%

Singapore Exchange

S$1.69

S$6.97

412%

14.4%

Singapore Airlines

S$11.20

S$10.46

-6.6%

-0.6%

Neptune Orient Lines

S$2.16

S$0.985

-54.4%

-7.2%

Source: S&P Capital IQ

Thing is though, even the best of the best in the investment business can often get things wrong. As Peter Lynch once said, “In this business, if you’re good, you’re right six times out of ten.”  It’s inevitable that some of your investments will turn out to be mistakes. But, if you are someone that can’t handle the ups and downs of the market and might make the wrong decisions at the worst possible times, it might be better to hand control of your investments over to someone you can trust.

2. You are not satisfied with just getting market-like returns

Simply investing in index funds – funds that track broad stock market indices – can allow an investor to earn what’s termed as ‘market returns’. However, if you are someone who has no interest in investing and yet are not satisfied with earning returns on par with the general market, then selecting an investment manager might be the only way you can outperform the market.

Do bear in mind that there’s always two sides to a coin: Although investment managers gives you the possibility of outperforming the market, they also often underperform the general market.

3. You are not a good saver

Lastly, letting someone else manage your money for you might be feasible if you are not a good saver. If seeing idle cash or having liquid investments lying around gives rise to the temptation to spend, then forcing yourself to save and invest through insurance policies or investment funds with fixed time frames might work. Such investments are hardly ideal but it’s much better than spending all your money.

Foolish Summary

If you have some of the signs mentioned above, you might want to consider allocating a portion of your wealth to an investment manager. Do note however, that selecting the right manager requires some analysis as well, so do your homework before making any decision.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.