None of this is rocket science. What makes this worth writing about anyway is that I see so many people not adhere to these simple concepts. I also see many parents struggle to help their children learn about finance and to respect the value of money.
Once those basic concepts are understood, one can start talking about portfolio construction. In our industry, we differentiate between financial planners, asset allocators and portfolio managers. A do-it-yourself investor might be wearing all these hats simultaneously. To make it clear, I have nothing against do-it-yourself investors because they are engaged. I would much rather see a do-it-yourself investor who is engaged than someone who has lots of advisors, but doesn’t listen to them or manage them. Just like any outsourced relationship, hiring an investment professional requires management.
Axel Merk is president and chief investment officer of Merk Investments.