Managed Funds or Shares?

Thanks to online share trading websites like E-trade, it seems as though anyone with an internet connection can easily become a stock market expert. While many people enjoy the freedom of 24/7 access to their portfolio and lower commission fees, there are some financial gurus out there who believe that online share trading is risky for the average at-home day trader, and encourage managed funds as a viable option for those with little stock market experience. If you're looking to make a few investments of your own, then you'll need to know the difference between direct share investing and managed funds, and determine which option is right for you.

Direct investment through online brokerage websites is often the simplest way to access the stock market from the comfort of your own home, but it does come at a price: those looking to make a substantial return on investment will need a large amount of money to start. You will also need knowledge of financial markets and do background research into stock markets trends. While some people may thrive on the independence that online share trading offers, it's very easy to lose money, as you're competing with professionals who have worked in the stock market for several years. Additionally, many novice traders find that the time needed to research smart investments can often cancel out any financial gain. But like all things that are risky, the pay-off from making smart investments can be worth it.

Another option for novices in the stock market is investing in managed funds. This allows experts to join your money with other investors, and make decisions in your best interest. Managed funds often are a more popular choice for stock market beginners, as you can still choose what investments you'd like to make, but under the guidance of an experienced professional. Managed funds also open up new investment opportunities, like in commercial property, that are not normally available to individual investors. Without being willing to take risk, there will be little return; you're much less likely to reap as many financial rewards as you would have through direct investing. Additionally, management fees can be expensive, which is a turnoff for clients who only want to make a minor profit. But for those who are novices in the stock market, it's often a better choice to learn from an experienced day trader, as opposed to going it alone.

It is important to work out what is the right investment option for you, and this will come down to what expectations you have. If you're an experienced day trader, or have a good handle on stock market trends and want to avoid paying major management fees, online share trading might be a better option for you, as you'll be able to make smarter choices than a novice trader. For those with little experience of share trading and stock market investments it may be a better option to get guidance from a managed fund run by professional day traders, compared to doing it on your own.