Should You Manage Your Wealth as an HNI? Risks & Rewards

For high-net-worth individuals (HNIs), wealth is not just possessions. Wealth is a gateway to strategic possibilities and unused opportunities. You need a sound financial understanding and a thirst for innovation to exploit these opportunities. This could mean expanding investments or developing strategic associations.
 

The financial requirements and objectives of each High-Net-Worth Individual (HNI) could differ and require expertise and attention. While some HNIs manage their funds independently, others associate with financial management firms. An HNI  can decide whether to self-manage or take assistance from a professional based on factors including their financial knowledge, investment preferences, and risk appetite.
 

This blog will list the rewards and risks associated with managing your wealth. 
 

Advantages of Managing Your Own Wealth

No one cares about your money the way you do. So, why would you pay someone else to decide your investments? Here are some benefits of managing your own money as an HNI:
 

1. You can save on fees

If you manage wealth on your own, you won't have to pay for professional services, and you can select no-fee or low-fee investment options that will allow you to gain more.
 

2. You can improve your financial knowledge

If you manage your investments independently, you learn how to set your financial objectives and invest wisely.  The knowledge you gain during the process is invaluable. As you make short-term and long-term choices to handle your funds, you gradually learn to implement investment strategies, manage the risks, and distribute your assets.
 

3. You would not feel external pressure

When you delegate the task of managing your money to professional fund managers, you are restricted from making decisions independently, even if you are sure they are the right ones. However, when you don't get professional help, you require more time to educate yourself to make the right decisions and believe in your expertise.
 

4. You have complete control over your money

Managing your money independently gives you more flexibility about what you do with it. Hiring a financial advisor narrows the scope of investments, but managing investments independently allows you to work with any financial institution to buy assets. 
 

Disadvantages of Managing Your Own Investments

Here are some of the challenges associated with self-management of funds:
 

1. More effort and time required

Even if you follow a simple approach to managing your portfolio, it will require significant time and effort. Additionally, researching investments and monitoring your portfolio requires more education, discipline, and vigilance. 
 

2. More Risks

You may be more vulnerable to risks while you manage your own investments that can ruin the value of your portfolio. 
 

3. Chances of emotional decision-making

While you manage your funds, you are more likely to make emotional decisions instead of rational decisions, which can erode your portfolio.
 

4. Limited Diversification

When you manage your investments, you may need help diversifying across different sectors and asset classes. On the other hand, investment professionals have enough experience, expertise, and access to tools and resources that help you diversify your portfolio.

Before you dive into the stock market to manage wealth, take some time to consider the potential risks you may face along the way:

Conclusion

The best approach involves self-managing your money and seeking professional assistance. In this approach, you actively manage your investments and associate with a professional fund manager for guidance. In both cases, avoiding exorbitant fees is crucial. So, take time to do your research and find a best-priced option.