Fund managers- my heroes
Within your super fund, you will usually have a number of different investment options (ie, growth, balanced etc). Generally speaking, these will be managed funds, and whether you have made an active selection or not, you will be investing your super fund indirectly in the stock market via a managed fund.
A managed fund is an amalgamation of lots of different people’s money, pooled together so that a fund manager can invest that money to the best of their abilities.
I am not trying to discount investing in individual stocks, as this can be a great option, however for the average person; a managed fund is a pretty good option. Honestly, do you have time to recreate financial reports for large corporations, or learn everything there is to know about mining before you decide to invest in mining stocks? Probably not.
The beauty of a managed fund is that you can invest in many different stocks, derivatives, property and cash type products, while someone makes the educated decisions for you. Each managed fund is managed differently and you can choose a fund/s that suits your risk levels and even what you are interested in.
There are small company funds, environmentally friendly funds and even biblically responsible managed funds.
You can have the benefit of owning shares while someone is managing your ‘portfolio’ full time and your risk is reduced by owning many different shares through a managed fund.
If you had $20,000 to invest in shares, you may be able to buy 1 or 2 different shares. If however you took that $20,000 and invested it into a managed fund, it is likely that you will be invested in 20+ different shares. This means you have the benefit of diversification which reduces your overall risk as an investor.
Diversification is a whole other topic that I will get to in a later post.
So, whilst Ironman is still number 1 to me, fund managers are high on the list, the trick is picking the right one/s.
– This post is from our resident senior financial planner, Cara Brett. Check out her details in our about us page.