Investing Tips: Smaller Investments Mean Less Risk
Posted by Jim Peters at May 3rd, 2013
The economies of scale are known to also apply favorably in wealth management. The only problem remains to be the chance of detrimental losses in case things go awry. To counter this, many players in marketing are opting for smaller funds rather than investing on mega funds and foots the entire risks and hope for profits on their own.
By investing on small fund flashes, you have the chance of trying out your ideas without fear of failure. Big and complex investments need unique ideas to make a difference. Furthermore, the implementation of such ideas might be more expensive and less practical. With a smaller fund, you have the flexibility of coming with a good market specific idea and implementing it before your window of opportunity closes.
A good example that will give you insight into the idea is George Young’s experience. He is the portfolio of a $303 million balanced fund, which has grown from a mere $56 since 2008. According to him, though the profit margins have increased, the increase in amount of wealth to manage makes the whole business a real head ache to run. Before purchasing anything, detailed deliberations have to be made since there is so much to invest with any error leading to acute losses.
Clearly, wealth management is one very different thing from the creation of profits. With high chunks of investments come higher profits but more risks to deal with. Conversely, flush funds give you the option to play with your knack and squeeze profits out of the slightest of the chances the market has to offer. If you want to continue making profits without having to risk all that you got in one venture, it were easier if you keep to the mutual ownership of huge funds.
About the Author
Jim Peters is the Owner of Centaurus Financial Inc., which is a team of highly qualified certified financial planners based in Irvine, California. As an Orange County financial planner and advisor, Jim and his experienced team offer a wide range of services and products for both individuals and business owners, helping their clients pursue and reach their financial goals.Google+