Part I in our series on self-directed investing.

Do you trust your financial future to someone else, or do you take charge yourself?

It’s a fundamental question you have to answer on yourjourney to building wealth.

If you’re just getting into investing, or you’reconsidering taking over control of your portfolio for the first time, there’s alot of information to get your head around.

In this series of posts, we aim to introduce you to the ideas, skills and discipline involved with taking ownership of your own portfolio.

Never has grasping the principles of self-directedinvesting been more important.

According to Canstar,‘we are in the midst of themost significant shift of power in the finance world of the past decade’.

What is this shift?

It’s the rise of the self-directedinvestor.

Generation X and Y willcontrol about 70% of financial assets within the next 10 years.

We’ll control these assets amid unprecedented trendsusing new technology and services as we create wealth and build our financialfuture.

So, will you leave your investments and wealthbuilding to a third-party advisor or manager?

Or…

Take Ownership Of Your Portfolio Management

“The better you understand yourself, the betteryou’ll become. You’ll be better. You’ll do better.” — Jocko Willink

Managing your own portfolio is a way of taking direct control of your financial future.

You choose what to buy, what to sell and when to buy and sell it.

You choose your asset allocation.

You choose the types of stocks you invest in.

If you have a vision for how you want your life to be— especially when you retire — then it makes sense that you should steeryour investments instead of paying someone else to do so.

But, it only makes sense if you have…

The time, the inclination and the discipline.

Portfolio management requires focus and energy.

But when you look at how those whose full-time job itis to manage other people’s money perform; you can see why it can be worthtaking ownership.

This article from Liberated Stock Trader reveals that more than 60% of fund managers failed to beat the wider market over a 12-month period.

Overthree years, a staggering 92.91% failed to beat the market index.

Now, if the market is rising, it’s not the end of theworld if a fund manager fails to beat it.

If stocks rise 10%, you theoretically increase your portfolio’s value by the same amount.

The thing is, you’ll pay the advisor or fund manager apercentage for achieving nothing more than the broader market did anyway.

Worse, you’ll pay them for a return that is actuallybelow what you would have made simply investing in an indexed fund.

And worse still…

You won’t gain the knowledge and understanding thatcomes from taking ownership of your own investing.

As retired Navy SEAL commander, Jocko Willink, pointsout, the better you understand yourself, the better you’ll do.

In other words, by taking ownership of your owninvestments rather than paying someone else (who probably won’t beat themarket)…

You can directly guide the investments that willdetermine your financial future.

Are you ready for that?

Great. Next, you’ll want to…

Learn From The Portfolio Management Masters.

“Someone is sitting in the shade today becausesomeone planted a tree a long time ago.” — Warren Buffett

Taking ownership means you will need to take guidance from others who have done the same.

You can save yourselfhaving to learn hard lessons by studying those who’ve learned them before you.

You will have atleast heard the name Warren Buffett.

The finance worldgenerally regards Buffett as the king of investing.

Buffett followed the principles set out byBenjamin Graham to amass a multibillion dollar fortune.

If you’d invested $10,000 with Buffet’sBerkshire Hathaway in 1965, that investment would now be worth more than $50million.

But more amazing than the gargantuan long-termgains the man has achieved are the simple principles he has followed to getthem.

Buffett researches his investments in depth,sticks to a proven formula for selecting sectors and companies, and doesn’t letemotion or hype dictate his decisions.

He’s also deeply patient, claiming his favourite holding period for an investment is ‘forever’.

He has built his wealth by thinking about the long term.

His mentor, Benjamin Graham, is the man behindthe ‘value investing’ idea so central to Buffett’s success.

This is the idea that an investment should be worth a lot more than you pay for it.

Graham believed in fundamental analysis. He looked for companies with strong balance sheets, little debt, above-average profit margins, and ample cash flow.

In other words, good companies with favourableoutlooks. Simple, right?

Buffett and Graham are just two investingmasters you can learn a lot from.

But the list of intelligent, wealthy investorswilling to share their knowledge is long and worth diving into as you createyour own strategy.

Check out Ray Dalio, John Templeton and Peter Lynch (and feel free to suggest your personal favourites in the comments!)

Three Questions To Ask Yourself Before Becoming A Self-Directed Investor

OK, so you know you’re living in a time of massive change.

Generation X and Y are becoming the dominant forces in the financial markets.

The way we invest — our values, objectives, the tools and tech we’re using — is changing rapidly.

Financial advisors and mutual funds tend not to deliver great returns (especially when you take their fees into account).

The masters like Buffett and Graham prove that self-directed investors can flourish if they deploy strategy, patience and critical thinking in a disciplined fashion.

You want to take ownership and start managing your own portfolio.

This great article from Forbes suggests you ask yourself four key questions before you take the reins.

Are you truly motivated to become a self-directed investor?

This isn’t as simple as yes or no.

Rather, define the precise nature of your motivation.

Maybe you’re taking control back from a financial manager and want to maintain a certain performance level while saving on fees.

(Consider that a $1 million portfolio might cost up to $12,000 in fees a year.)

Perhaps you want to test out a particular strategy to boost your returns and take on more risk.

Or, maybe you’re looking to invest in a specific area of the market you understand and are passionate about.

Whatever your motivation, be clear about it from the outset of managing your own investments.

Will you make the time to manage your portfolio?

Managing your portfolio isn’t a full-time job.

But it will take a serious commitment of both time and energy.

If you’re just learning about investing your money and implementing a strategy, be patient and prepared to dig in — especially at the start.

Your investing style will also affect how much time you need to commit week to week.

If you’re a buy-and-hold type of investor, you might not need to keep tabs on your portfolio as much as you would if you were a day trader.

Either way, understand that taking ownership of your investments like this requires a significant time commitment.

What knowledge do you already have — and how much will you learn as you go?

You don’t need a finance degree to manage your own portfolio.

But, you do need to be able to interpret large amounts of information — about the markets, the business world, your own financial goals — to make good decisions.

Don’t invest beyond your current level of knowledge.

Seek guidance from those more experienced.

Use second and third opinions to your advantage.

But most of all…

Turn every experience you have managing your own portfolio into a lesson you can implement next time you make a decision.

Taking ownership of your invested wealth means making a commitment to learning all the time.

I hope this first part in our self-directed investing series has been helpful to you.

Please let us know your thoughts and opinions in the comments.

And keep an eye out for part two, coming soon.