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Showdown: Online versus Managed

The personality and lifestyle of the investor largely determines their preference for online or managed investing.

Mike Ser is a Vancouver-based trader and online investing teacher. He was introduced to online investing in 1999 at the height of the tech boom. He made sizable returns — between 100% and 200% a year — but lost it all when the tech bubble burst. But Ser read numerous books and articles, researched stocks and jumped back into the market.

These days, he invests entirely online within an RRSP, trading tech and energy stocks. While he doesn’t often touch his long-term savings, he day-trades for an hour or two a day earning about 40% to 60% a year. Most of his money is invested in equities — he likes to trade tech firms, such as Apple and Amazon, and commodities such as gold and silver ETFs, using brokerage firms Interactive Brokers and CMC Markets.. “I wouldn’t do it any other way,” he says.

Toronto-based IT manager Dave Aeri takes a different approach. An advisor oversees about 85% of his portfolio, which is in mutual funds. His investments range from a relatively safe Canadian bond fund to a moderately higher-risk technology stock fund. “As a whole, my investments have seen gains of between 16% and 36% at different points in the last five years,” says Aeri. His advisor takes a commission from a mutual fund company, so Aeri doesn’t pay any front-end or back-end loads. However, the funds themselves take about a 2% fee.

As much as Aeri likes working with an advisor, he does have a tiny portion of his portfolio in stocks that he buys himself online for fun, such as Apple. “It’s the gambling portion,” he says.

He speaks often with his advisor, who has been managing his portfolio for about six years. A good investment professional should be reviewing your portfolio at least twice a year, Aeri says, and you should ask tough questions to discover whether your investment advisor is really working for you.

“Ask what he did to avoid potential declines,” Aeri says. “Did he think to call you to see how you would feel about your fund taking a hit? Or is the call to you to discuss the impact to your portfolio post-impact?”

However you choose to invest, the same basic rules apply — know what you’re doing and regularly review your portfolio. In other words, invest responsibly.

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