Investing + 1 more
Date: February 1, 2021

Pros and Cons of Managing Your Own Investments in Retirement

Finding a financial advisor in Lakewood, CO may be a great first step in your retirement planning. Retirement is a time to do whatever you want – start a business, travel, and indulge in the activities you didn’t have much time for when working.

Some folks like to manage their own investments in retirement. Others, however, don’t! If you’ve ever wondered whether it’s a good idea to spend your golden years choosing and tracking your investments, here’s some pro and con advice to help you make up your mind.



1. Information is more accessible than ever before

When your own grandparents retired, it’s very likely that information on investments was easy to find only for a small group of people – those who already had some financial or economic background, or those very interested in investments. Many people back in that day may have felt it wasn’t needed, for that matter. Fifty years ago, pensions to support folks once they got older were common.

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Pensions are now, however, very scarce. Defined contribution plans like 401(k)s and self-directed plans like individual retirement accounts (IRAs) have by and large taken their place. Concurrently, information on personal finance, including how to invest, has become easily available in books, newspapers, and magazines and on the internet 

In short, information on everything from asset allocation strategies to price/earnings ratios is very accessible.

2. You’re concerned about what happens to your money

Most retirees care about their investments. For many, withdrawals from their retirement accounts form part of their monthly income. But even if they don’t, the process of retiring makes it very clear how important investments are. You may want to be more involved in choosing and watching your investments move over time.

Many retirees may also feel the need to keep up with their investments because of the requirements surrounding withdrawals, such as required minimum distributions (RMDs). Individuals may also have concerns about how much can be withdrawn from a portfolio without running out of money as they age, and want to monitor events to make sure they don’t.

3. It can be a pleasurable pastime

Most people have hobbies they enjoy in retirement. For many people, making decisions about investments can be one of those hobbies. You may enjoy the process of trying to grow your money, trying to beat the broad market averages, or reading about companies, current events, and economics.

If you were involved in your investments before retirement, you may want to continue. If you weren’t, you may want to learn more now that you have the time.



1. Investing is complicated

While some information on how to invest is readily available, investing also poses plenty of complications. There are multiple methods of valuing stocks and multiple strategies for picking investments – most professional financial advisors will run many hypothetical investment scenarios to make sure they get your allocations correct.

The complications don’t end with picking and choosing, either. Tax concerns are a huge part of investing. It’s easy to see your gains vanish because of tax laws that you were unaware of (or that changed from prior years). Your risk level, your asset allocation, buying and selling concerns – all these pose potential complications as well.

2. Managing your emotions can be difficult

It’s safe to say most investors want their money to grow – or at least stay the same. But alas, constant and steady climbing is not always the way of the world for many investment classes. Stock prices, for example, tend to fluctuate, sometimes dropping very steeply.

Many investors know that the markets can be volatile, but they still may find it hard to completely manage their emotions when markets plunge. After all, when your portfolio is worth thousands of dollars less than it was yesterday, it is sometimes human nature to want to stop the hemorrhage.

But selling stocks in the face of a downturn is almost never a good move. You effectively remove the stocks’ ability to do what sound investments may do: start to move up again in the long term.

3. Managing investments can be time-consuming

The entire process of managing investments can be incredibly time-consuming. Choosing each investment, researching its profile, defining your asset allocation strategy, monitoring what the investments do over time, researching your tax position, and deciding what to sell and when can all take hours on the clock…and that’s only a fraction of the tasks involved.

You may well decide that your other favorite pastimes, whether they’re tennis or music, are more worth your while.


Working with a Financial Advisor: Capture the Best of Both Worlds

There is a way to capture the best of both worlds. It’s working with a financial advisor. Working with a financial advisor to create a retirement plan allows you to benefit from the pros of doing it yourself and avoid the cons. (In fact, benefiting from the positives and avoiding the negatives are one of the things smart investing is all about, so you’re right in step.)

A CERTIFIED FINANCIAL PLANNER™ Professional has the experience and qualifications in financial planning. That means they have a firm handle on choosing sound investments, maximizing returns, and protecting against the downside. They possess expertise in taxation issues and changing environments in economics, finance, and politics – all of which can affect your investments.

At the same time, they tailor investment portfolios to you. They base all investments on your personal goals, which are the bedrock of any financial plan. They assess your risk tolerance, which can be helpful in managing emotions. They analyze the appropriate asset allocation strategies to maximize returns while minimizing risk.

Financial advisors are professionals. It’s their daily job to manage your investments. It can relieve you of a time burden to know that your investments are safely in the hands of a pro. Investment portfolios should also be monitored, rebalanced, and reallocated as necessary, which financial advisors perform as a matter of course.  Finally, financial advisors can help you with concerns about your investments, such as Required Minimum Distributions (RMDs).

When you interview financial advisors, discuss your preferred level of involvement in your own investments. The best financial advisor for you is one who you feel comfortable with and who will work with you, whatever your preference level is. 

The CERTIFIED FINANCIAL PLANNER™ Professionals and Certified Estate Planners™ at The Normandy Group offer serious financial planning for today’s complex world.  By combining tax, financial, and estate planning strategies we can help you achieve your goals. Contact us today for a complimentary consultation.


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Charles Partheymuller