Managed Money Programs

If you don’t have a lot of experience in the investment world, you may want to consider managed money programs. This is a situation where you would hand over your money for investments to a broker or other investment professional. They would take care of buying and selling on you behalf using their expert knowledge. Of course, this type of service doesn’t come free. The manager or broker will charge a flat rate fee to the investor for their services. In some cases, this fee is paid yearly, in others it can be broken up into more frequent payments, such as semi-annually, quarterly or monthly. A wrap account is another term used to describe a managed money account.

If you’re still undecided about using a managed money program, carefully weigh all advantages and disadvantages before making a decision. One advantage of this type of approach is the time you’ll save. If you’re like many individual investors, you may have plenty of other important things that keep you busy. For example, you may be working a full time job and raising a family, which leaves you little time to research and execute investments. Another advantage is the knowledge an investment professional has. They have been educated and trained in their career field and have experience with different investment situations. This of course increases your chances of successful investments that turn a profit.

When setting up a managed money program, there are different variations you can choose. For example, you might decide to invest in mutual funds. If so, you would hand over the money to be placed in the fund, while the investment manager you’ve chosen makes decisions regarding the fund. In this type of case a percentage is usually taken from your account on a specified regular basis, which will be outlined in a legally binding contract.

Or, you could set up a separate account that the investment professional will manage. You can set certain criteria for the investment manager, such as the level of risk you want to assume. The money manager will use the client’s guidelines to make investments accordingly. If you are someone who wants to take a low-risk approach, the manager will invest in low-risk securities. If you want a diversified approach that includes low, moderate and high risk investments, specify to the investment manager how much money should be devoted to the various risk levels and he or she will trade based on your instructions. While you are leaving the decisions about what and when to buy and sell up to your manager, you are the one who determines the level or levels of risk you want to take on using your money.

If you prefer more of an active role in investment decisions, consider hiring a broker with whom you can make investment decisions with rather than giving them free reign. After paying the fee to the broker, you are given as many trades as you want during your contract period. Your broker will offer advice and counsel based on your financial goals, however the final decisions on what to buy and sell are up to you. Both a managed money account and a brokerage account give you professional help and a certain amount of control over your investments, however the latter offers the investor the highest level of control while still providing professional guidance.

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