Nature is lazy and attempts to organize things so the least amount of energy is needed to maintain the structures created. The second law of thermodynamics can be rewritten as “for a closed system, with constant external parameters and entropy, the internal energy will decrease and approach a minimum value at equilibrium.” – Wikipedia, principle of minimum energy
The minimum value at equilibrium is the key. It’s stable and requires little effort to maintain. Equilibrium is the place where what is required happens until something external disturbs it.
You should organize your portfolio to require the least energy. If you must pay careful attention to it and work to keep it in equilibrium, you must be paid for this additional input. Poorly analyzed, the return you get for the money you contribute will seem very high. All investments require more than just money.
In some cases, it is as simple as sticking to investments you understand. Many real estate brokers own real estate. Many oil specialists own oil stocks. Investment managers own stocks that match their idea of what generates value.
To stray far from your knowledge base requires effort and risk. Nuance is invisible when you are not a specialist. Becoming an expert, or even a skilled amateur, requires significant study. How do you get paid for that input?
The other extreme is to know nothing and allow others to pick and choose specific investments. If you have any involvement at all, it will be to specify a particular mix. Maybe some required yield, and a portfolio format of 75% stock, 25% bonds and cash. From there on, it is the investment professional who implements specific tactics.
You should be too. Think of it as organizing for a result with the least cost. Efficiency. If you lack special knowledge, the minimum energy to maintain a structure is where you should aim your efforts. From then on it is merely a question of picking someone who will supply the necessary energy for a fee.
Think of it as buying time to do what you are good at doing.
I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages—the result: more security, more efficient income, larger and more liquid estates.
Please be in touch if I can help you. firstname.lastname@example.org 705-927-4770