Editor’s Note: This is a Guest Post from Sachin
Even the most successful professional share traders will tell you that managing a share portfolio in real time trading can be a truly tough, grinding experience. All professional share traders will also tell you without exception that they’ve taken losses, too. For private investors, losses can accumulate, all too quickly, and in large bites. If you want to invest in share trading, managed share investments are definitely the safer option.
What’s Really Wrong with DIY Share Trading
The fact is that share trading really isn’t as simple as it looks. Day traders, who literally have to work with daily share price margins, manage portfolios of live stocks which must be monitored closely. This is a very time-consuming, almost obsessive process, and it’s nerve wracking to say the least. On some days, margins are microscopic. You wouldn’t get out of bed, much less risk good money, on such low margins. Good days do happen, but so do days when staying in bed would definitely be a better option.
The less frenzied form of share trading, just buying and selling occasionally, may be more sedate, but it can be equally frustrating. As we’ve seen around the world in recent years, share markets don’t find it hard to be virtually static for years. The simple fact for investors is that a comatose market means their money is either lost or in hibernation until the share prices go up again. Bear in mind that “down” for recent markets has meant nosedives with very slow recoveries. You’ll get an idea of the time scales involved just in breaking even in a negative market environment when you consider that it took 2 years for the big 2007 crash to hit even a barely respectable comeback level.That’s not good business, anyway you look at it. Most private investors get into these situations at some point, and they’re invariably frustrating, expensive wastes of time and money. Many private investors get out of the “make or break” investment trap and go looking for better options.
It’s simply not realistic to believe that you can invest in shares without some level of risk. Share prices go up and down, and that’s really the whole story. Good share investment is actually quite similar to risk management. Managed funds are a good example of how this is done. Professional fund managers balance risk and cover multiple areas of investment, both hedging against losses and spreading the investments to capitalize on potentials for gains.Professionally managed funds have the capital and resources to maximize returns while covering risk across the markets and indices. Private investors in these funds enjoy the rewards of share trading without the frustration, and their risk is managed for them. The difference between investment in managed funds and the roller coaster ride of DIY share trading is the difference between a Lear Jet and a paper dart, in terms of comfort. If you’re looking for a better way of investing in shares, start by checking out managed funds.
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