Should You Be Your Own Stock Portfolio Manager? Let’s Find Out

With more than half of Americans invested in stocks, it’s quite clear that the stock market is one of the best ways to build wealth.

While putting your money in the market is easy, you’ll ultimately have to make a decision on who should manage your investment portfolio.

Today, investors have access to self-service tech and unprecedented investment information. This is slowly eliminating the need to hire a stock portfolio manager. Individual investors can now make their own decisions based on market statistics.

But before taking the “do-it-yourself” route, you’ll need more than just access to information.

Here’s how to manage your own portfolio:

  1. Understand the Investment Principles

Learning the core concepts of investing helps you build an intellectual framework for managing your own investments.

The principles guide you on the characteristics to look for when buying or selling securities. Relying on investing news alone may not give you deeper insights into the value of a stock. If anything, it offers a false sense of security and you’ll be impulse-buying based on emotions rather than rational analysis.

Learning basic investment principles sure does take a lot of time but it helps you think from a business perspective.

  1. Build a Portfolio that Works for You

Building a portfolio is probably one of the few things that make most investors hire stock managers. However, building a profitable portfolio isn’t rocket science, though it’ll require digging deeper into portfolio structure techniques.

Consider the following tips when building a stock portfolio:

Size of Your Portfolio

The general rule of the thumb is to have a strict limit on the number of stocks in your portfolio. Ideally, the less the number of stocks you have, the easier it’ll be for you to manage.

Most importantly, don’t add a new stock until you’ve sold the ones you already own. This helps you stick to the portfolio size limit you’ve set.

Nevertheless, when planning to make a new buy, you should sell the least attractive stocks out of all the stocks in your portfolio.


Building a diversified portfolio helps you lower the risks without lowering the expected returns of a portfolio.

The idea is to invest in different stocks across the wide spectrum of market categories. At the same time, you also need to have a reasonable limit as to how much you can invest in a single market category.

Your asset allocation limit should be based on your time horizon and your risk tolerance. For an investor with a longer time horizon, an aggressive portfolio is your best bet. You have a high-risk tolerance and as such it makes sense investing a more into equities than bonds.

On the other hand, a conservative portfolio is for those with that can bear risks and often have a short time horizon. The goal is to invest in bonds and other fixed-income securities to protect the value of your portfolio.


Once you’ve set up your portfolio you need to periodically analyze its weightings. The stock market is highly volatile, meaning your initial portfolio weightings are likely to change.

For instance, you want to maintain a 45% stocks and 55% bonds weighting. Then, it happens that there’s a bull market and your stocks shoot up to 60%. In such a case, you may have to sell some stocks and buy bonds to get your portfolio to the initial weighting target.

Re-balancing also helps you adjust your portfolio to fit your current financial situation. If for example, started as an aggressive investor, you may need to adjust your portfolio accordingly when your risk tolerance has dropped.

  1. Know Your Limitations

This one may be hard to admit but, you’ve to recognize the fact that your abilities are limited. You may feel confident investing in stocks, but you’re not sure you can do the same with mutual funds and bonds.

Managing fixed-income investments is a complicated process that’s best handled by professional financial managers. However, with time, you can grow your abilities and start managing these assets on your own.

  1. Use Financial Management Programs

Financial management tools have fueled the urge of many investors to manage their own stock portfolio. They not only make it easy to trade stocks, but also keep track of your investments.

Others can even help you create your investment portfolio in line with your financial goals, timeline and risk comfort levels. The tools are available in a wide range of prices from free to premium subscriptions.

  1. Keep Records

Keeping a hard copy of stocks that you own is essential in tracking their progress.
Additionally, you also have to keep records of receipts from any money spent on your portfolio. The costs spent maintaining a portfolio count as deductibles when it comes to paying income tax. So, it’s important to accurately add them up and keep records as proof of how much you spent.

On the same note, managing your own portfolio gives you more ways to reduce taxes as compared to hiring a money manager to handle your investments.

For example, a portfolio managed by a financial advisor is characterized by frequent trades as the money manager tries to keep up with the marketing. This results in high transactions and tax deductibles.

When managing your own stocks, you can limit the transactions and eventually cut down on the taxes.

  1. Keep Your Emotions Out of It

Every smart investor knows that the best time to buy stocks is when the bear is ruling the market. But, more often than not, investors will be quick to sell security as soon as the price start nose-diving.

The situation becomes even harder for individual investors managing their own stock portfolios. Few can withstand watching their holdings fall by huge percentages, without panicking or liquidating their investments.

But if you want to be successful at managing your portfolio, you must learn to act rationally rather than letting market trends influence your decisions.

Should You Fire Your Stock Portfolio Manager?

It’s undeniable that a stock portfolio manager has all the experience and skills needed to successfully manage stocks. But, this doesn’t mean it’s impossible for individual investors to manage their own stocks.

Besides, managing your own stock portfolio can be a good way to cut on the cost of hiring an investment manager. To give you a head-start on how to effectively manage your portfolio, you’ll find the tips above will be resourceful.

Browse our blog for more investment articles.

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