Take control of your investing

As time rolls gently by, more of us are taking responsibility for managing our pensions and investments. Hallelujah, I say.

Often, it's by choice but sometimes we're nudged into doing it – because our financial adviser has retired, we can't find anyone to look after our finances (an increasing problem) or our employer has asked us to determine where our company pensions are invested (highly likely if you're contributing into a so-called defined contribution).

Taking control of our investments can be empowering – and also (don't knock it) great fun. Managing your finances does not have to be a chore. Honestly.

It has also been made easier by the development of numerous internet-based trading platforms that now allow you to hold most of your investments under one umbrella – be they shares or funds. In turn, these holdings can be held on the platform within a tax-friendly Isa or self-invested personal pension (sipp).

AJ Bell, Alliance, Fidelity, Hargreaves Lansdown and Tilney Bestinvest are among the best, biggest and longest established platform providers although investors are spoilt for choice. New players come along every week.

Using a platform through which to hold your investments is enlightening.You can check how your portfolio is performing whenever you wish (provided you can remember the numerous passwords required) and, of course, you can change its constituents - and how much you are contributing – at the click of a button.

Which fund platforms are the cheapest?

The challenges

Scary? Yes. It's also addictive. I spend many an hour every month checking the progress of my modest Isa and Sipp, and contemplating whether I should spice things up by making a few changes.

Yet running your own investment portfolio does not come without its challenges.

Choosing the right platform in terms of cost and suitability is the first big hurdle. A lot will depend on how much you want to invest – and the funds you have available to transfer on to the platform - although you won't go far wrong with any of the big providers I've already mentioned.

Then, probably more crucially, there is the key issue of which investment funds to invest in. Most platforms now try to help out by providing lists of 'recommended' funds that tick all their boxes (in terms of strength of past performance record, quality of manager at the helm and value for money).

Many will also 'guide' you – if indeed you want guiding – towards ready-made fund portfolios, built for investors on the basis of their attitude towards risk. Useful, although it slightly defeats the object of the exercise – to self-manage your investments.

What is key is that if you go down the self-investment route, you keep a close eye on your investments. Hargreaves Lansdown recently said that as much as £400 billion is currently held in 'dinosaur' funds – investments no longer fit for purpose.

These dinosaurs (of Jurassic Park proportion) include with-profits funds, stakeholder pensions and a whole raft of poorly performing investment funds. Many investors, says Hargreaves, could do better by transferring out and seeking pastures new. Absolutely.

There is an argument – one that gains momentum every year – that those of us looking after our own money should now do no more than build a portfolio of trackers: funds that faithfully track a specific market or sector.

Such 'passive' vehicles, often bought in the form of an exchange traded fund, are low cost and cut out the risk of under- performance – a plague that affects many an actively managed investment fund.

Yet passives are only part of the solution to effective self-investment management. Provided you are prepared to do a little research, there are plenty of active funds around that have built formidable performance records.

Indeed, a good starting point would be to take a look at what Neil Woodford, one of Britain's most successful fund managers, has done in his first year at the helm of Woodford Equity Income.

In his first year after departing Invesco Perpetual, he has delivered investors a return of 19.6% – the best among his peers and way in excess of the FTSE All-Share Index (up 6.5%).