ANSWER TO PIER
Respond to your classmate\’s post, and explain whether you agree or disagree with each of your classmates. Use your Learning Materials to support your response.
POST FROM STUDENT:
Personally, I like investing myself as I love learning about finance. For the general population, I believe that investing with a money manager would be superior because if you are not a professional, it would be beneficial to seek someone who is. That being said, there is always going to be a lot of trust involved when letting someone else invest your money. Money managers can succumb to all of the behavioral biases that many individual investors face, which means there is even more risk involved that is out of your control. A money manager can exhibit overconfidence because of their qualifications and track record. An individual seeking financial management must trust that their money manager will be disciplined enough to acknowledge their bias and not act on it.
There are also many advantages to having a professional invest for you. Diversification of assets and it will free up time for you to do your own research are two that come to mind. For example, let’s say you are an executive at a marketing agency. Spending long hours throughout the week focusing on marketing plans has little to do with finance, so if you wanted to invest yourself you would have to dedicate your free time to do your research. Diversification is also a pro because many individual retail investors strictly buy stocks. A money manager would diversify your investment to take on less risk by buying mutual funds, bonds, and even CDs, really it depends on your goals and risk tolerance.
I have many different brokerage accounts for how I want to invest my money. I have a Roth IRA with Vanguard invested in a retirement fund. This is managed by Vanguard and helps me put away money for the long term and not worry about the everyday ups and downs of the market since they are looking out for me. On the other side, I use Robinhood for my speculative options trading where I want more control since I am doing my own due diligence on the trades I make.