Can you Invest Without a College Degree?
The answer to this question is YES; you can manage your own portfolio without having a professional degree. There are many people out there discouraging this idea, mainly because either they are lazy or they are making money out of the commissions you pay to have your portfolio professionally managed. Individual investors more than often beat the S&P 500 returns; they also beat professionally managed mutual funds. The reason we don’t hear about them often in the news is because they are not becoming millionaires, but they are increasing their wealth for their retirement or simply to buy their dream house.
Managing your own portfolio requires hard work and discipline. Remember nothing in this life is given to us on a silver platter; we must work for it and learn as much as we can. If you want to make money in stocks, which is the sole purpose of investing in them, you need to learn as much as you can about them. Who knows, you may find a passion for it and then it becomes exciting and lucrative.
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Individuals outperforming the market topic has been debated for ages. It’s true big multi-millionaire institutions offer an advantage, with professionals managing private information individuals can’t attain; therefore some see the fees or “loads” charged as reasonable justifying the unfair advantage they present to the individuals, but individuals have an advantage most people ignore. Individuals can find stocks that big mutual funds show a lack interest in for the moment given and if the homework is done correctly and the company implodes, then the rewards can be more than lucrative.
Stock Chart by E*Trade
A quick example would be Ford (F).(Chart above). In 2008 Ford Motors faced financial difficulties and rumors where being spread about the company filing for bankruptcy, big financial institutions left the stock for death. Many individual investors who jumped at the opportunity, limiting their losses and with the proper homework, found out the company had potential in recuperating, Wall Street just didn’t want to wait. 2 year later the company improved dramatically, catching the eye of big Wall Street investment banks, flocking to buy the stock once again. Individual investors who bought the stock in 2008 and sold it in January 2011 received a generous 1,204.20% increase. That is if you had invested $1000 in 2008 you would have made $12,042 in profits at the beginning of 2012. Same story has happened with several companies. Pier One Imports (PIR) is another example staggering 20,763.64% in returns from 2009 to date that is 207x times your initial investment.
The Bottom Line
Everybody who is willing to put the work and effort to learn about investing in stocks can manage their own portfolio. Self-discipline is a skill most individual investors should acquire due to the high risk of speculation and the lack of initiative to cut their loses short. Don’t fall in love with a stock, and learn when you made a bad investment decision. Mutual funds offer great advantages for those who simply don’t have the time to study and do their homework, find which one is good for you and your financial goals.
See Also: How to Invest in Mutual Funds