Contingencies
19th May 2025
5 min Quick Look
Focus – Should you manage your own share portfolio or use a managed fund?
Key Takeaways:
Introduction
You might’ve heard a friend talk about a stock that doubled overnight. Or seen a headline claiming someone turned $10,000 into $100,000 in just a few months. It’s tempting to think you could do the same
But behind the hype, the reality is very different. While it’s possible to build your own portfolio, it takes serious time, knowledge, and emotional discipline. That’s why many Australians choose managed funds or diversified ETFs to help grow their wealth—with less stress
First of all, let’s examine where share investment fits into a wealth management program. We believe that property is the way to wealth and that superannuation is the way to retirement; and that share investment is best considered an active savings contingency. That’s because it’s hard to beat the leverage for growth that is implicit with property investment or the tax effectiveness of super. Not having either of these advantages makes it hard for shares to keep up. But done efficiently, shares can make a significant contribution to a solid wealth program and provide ready liquidity (cash from selling) as a contingency to shore up cash flow problems. So how best to go about share investment.
DIY (do it yourself) share investing gives you control—but it also gives you responsibility. Picking individual shares sounds exciting, especially when media stories highlight incredible wins. But the failures are far more common and rarely make headlines.
Many people treat share investing like gambling. They chase tips, follow fads, and act out of fear or greed. Without proper research, diversification, and risk management, the odds are stacked
against consistent success
Here’s what it really takes to be a successful DIY investor :
Even if you put in the work, outperformance is rare. Beating the market usually involves taking concentrated risks—which means bigger up sand downs.
If you still want to go it alone, consider focusing on thematic ETFs instead of individual shares. These are bundled investments that follow a theme (like clean energy or tech) and are diversified across many companies. For a solid base, look for:
This gives you instant diversification, typically lower fees, and easier rebalancing.
On the other hand, professionally managed funds—whether active or passive—may suit investors who prefer a hands-off approach. But as the SPIVA report shows, professionals can not beat market indexes while the alternative way to invest via index funds has very low fees. So why pay a professional manager when a low-cost index will do just as well. You typically pay a small annual fee, and in return, you get:
Isn’t DIY investing cheaper than paying a fund?
Sometimes—but not always. Brokerage fees, taxes from frequent trading, and poor decisions can cost more than a simple index fund fee. And don’t forget to factor in the enormous amount of time and energy that applies to DIY. Think of all the better things you could be doing with your time–family, friends, leisure, or even studying to improve your career or working extra time
I subscribed to a stock - picking newsletter — isn’t that enough?
Can’t I just pick a few top - performing stocks?
What if I want control but not the effort?
Conclusion
The idea of picking winning shares can be exciting—but for most Australians, it’s not realistic or sustainable. Managed index funds and diversified ETFs offer a simple, reliable path to long-term growth without the emotional rollercoaster or time commitment.
Learning the difference puts you ahead of the crowd. The smartest investors aren’t the loudest—they’re the most consistent. And focusing on safety ahead of speculation will provide a better overall outcome.
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Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.
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