Reasons and Tips for Managing Your Own Stock Portfolio

September 22, 2019

If someone could – without fail – accurately predict changes in the stock market, it’d be considered insider trading, which is illegal. Professionals that manage stock portfolios on your behalf just happen to be better at guessing market trends.

In all honesty, you can manage your own stock portfolio with just a little extra work on your part.

Should you? And how can you?

Why Manage Your Own Stock Portfolio

It may feel better to give control over to professionals, especially those with credible track records. It feels even better to blame someone else for failings, rather than having only yourself to account for bad decisions. However, this false sense of security comes with a hefty price tag.

Firms that manage your portfolios have plenty of little extra fees they put on every action they complete. This adds up fast and takes money away from what could be going into your future.

There’s also no guarantee that the work they provide will be in your best interests.

Picking Your Own Stocks

So, if you’re set on managing your own portfolio, where can you begin?

Don’t Rush in for Big Companies

While it can be tempting to invest stock in big-name companies that you already know are successful, this is not always wise. These stocks are very costly, and everyone wants them. As such, the stocks you buy may be more expensive than their payout – harming your financial future, rather than helping it.

Use Your Interests as a Starting Point

Pick a service or product you have interest in and look at the various companies that have stocks for sale in those areas. Depending on your knowledge of this area, you may be aware of how those companies work. This lets you pick from the options with a degree of confidence, rather than blindly trying to decide.

Do you think solar power is the way of the future? Are you still betting on gas? Maybe you think wind farms are the safest pick. No matter your decision, you’re using your knowledge to make your best choice.

Look for Stocks Paying Dividends

Stocks that pay dividends are pretty handy. Regardless of if their value goes up or down, they’ll either provide a fixed dividend or a percentage dividend to stockholders every quarter.

The more of the stock you have, the more you’ll bring in with each dividend payment. From there, you can choose to automatically reinvest it in the same company or use the dividends to purchase other stocks. This is a safer bet than having to cash out on a profitable non-dividend stock, just to benefit from the success of the company.