Asset management basics - these things every investor should know

Anyone who has accumulated a certain amount of wealth over the course of their life usually asks themselves what they do best with it. Especially in times like these, when the future is uncertain, it only makes sense to make financial provisions and diversify one's investments. After all, traditional currencies alone carry a certain amount of risk. Basically, all it takes is hyperinflation to break the necks of big savers. So good asset management is essential. But before you start investing your money, you should at least know their basics.

Service providers can help with wealth managementUnless

you have a financial background, it is better to use professionals for wealth management. There are some wealth management companies that can help you keep track of your assets and make good investment.

For this, it is best to look at the reviews of clients on a portal to get an idea of the services they offer. This way, you can more easily decide which company suits you. Of course, the whole thing may cost you a lot of money. However, a service provider can save you from making bad investments, which would end up costing you a lot more. Not to mention, you may miss out on high profits. So leaving the management to professionals is not wrong at all. There are

two forms of asset management to distinguishAlthough

there are some sub-forms, you basically only need to distinguish between two types of asset management: Institutional and Private Wealth Management.

Institutional asset management refers to institutional investors such as government operations, foundations, and insurance companies. Private asset management, on the other hand, logically involves private individuals who are concerned about how best to manage their assets or where best to invest them. In this day and age, however, wealth management is no longer done through regular channels; there are also automated systems that can take over wealth management.

Advantages and disadvantages of robo-advisorsWhen

it comes to automated asset management, there is usually talk of so-called robo-advisors. However, these are not so much robots per se, but rather platforms on the Internet that act similarly to a human asset manager. In addition to online providers, robo-advisors are now also offered by some banks. Given their advantages, this is hardly surprising.

On the one hand, robo-advisors are inexpensive and investing is possible even with small amounts. For another, automation saves time and broad diversification across many asset classes is relatively straightforward. However, you must be aware that robo-advisors rely on standardized investment strategies, which means that the potential for individualization is low.

Cost of asset managementThere

is no self-explanatory way to say how much you will end up paying for asset management. What is certain, however, is that you will incur various costs. A large proportion of the costs are the fixed costs, which usually amount to a percentage of the assets. This percentage usually varies between 1.5 percent to 2.5 percent. In addition, there may be performance fees if profits have been made through certain investments.