In a previous post there was tough love, lets move on to happier things, what are the things that are going well for the individual investor?
Index funds are pretty prevalent and everybody knows about them. Indexing leads to lower fees and fees are the biggest killer of your portfolio. Lower the fees, less the hit. Today’s investor has many more low cost choices available. You can construct a good diversified portfolio with minimal cost yourself without needing a Phd.
Accessible tools and content
The internet, wonderful ain’t it. You have now have access to the best research at your fingertips. If you like doing your own analysis, even better, all the data is available for free! A plethora of online tools are also now available at your disposal. Want to track what you are spending, there is mint. Want to track how investments are doing, there is FutureAdvisor, Sigfig and Personal Capital to name a few
And the biggest advantage,
Investing is a long drawn out game. It take patience. An individual investor has the opportunity to have both – time and patience. An active money manager has to always think about getting better performance year over year. They succumb to group think, new fads and general herding mentality. You on the other hand have a relatively large enough time horizon. Especially since very few folks can time the market, the odds are you in your favor if you can ride out the volatility and don’t’ worry about it. You are afforded the luxury of tuning out the noise!
As an individual investor, your incentives are perfectly aligned. You want to do well so that you have the cash to *do* things for yourself. Use this to your advantage, its your money, take care of it.