Self-Directed Investors Seek Returns Elsewhere

Since the 2008 financial crisis many Americans have seen their own pensions either plummet or stagnate in value. Those with a high investment in the stock market know they are exposed to short term fluctuations, but some also worry about what they see as more systematic risks in the system itself. As such many investors are now questioning whether a traditional pension allocation is the best choice for them.

Managed futures are much more like traditional investment funds, you allocate your capital to an experienced manager who seeks greater returns for you. Day trading is on the opposite end of the spectrum where investors manage their own money, this  is a high risk strategy, reports on the success of day traders vary – since the industry is made up of entirely self directed traders we do not have reports on their success, some brokers even report that 90% of traders lose 90% of their money in 90 days! A possible medium between the world of managed funds and self directed funds are utilising the skill of professional traders whilst continuing to manage your own money.

stock market

Signal Services allow users to follow the strategy of established investment managers in the FX market whilst still retaining control of their own capital. This negates the capital risk of holding your money in brokerage accounts other than your own, up to 40% of investors in these services are using money which could have been contributed towards their work pension reports Forex Signals.

Allocating your savings to a traditional pension fund has typically been a very safe investment, pension funds are designed to match the rate of inflation and minimise risk – the idea being that over the long term 30-40 years those funds will not decline in value but maintain their purchasing power – contributions from employers also of course make these funds a very attractive option and make sense for many small investors.

However, what if the risk in investing was not due to the strategy itself but a more systematic risk. Nassim Taleb in his book “The black Swan” addresses such an idea, if a certain type of risk has the potential to wipe out your account balance to 0 is that a risk you should not take – no matter how small. Many investors are now arguing that if it is a possible risk then it is can happen to them – what could these risks be?

One possible factor is simply due to the high prices of the stock market, with equity markets such as the NASDAQ and S&P 500 currently trading at all time highs, traders question how much higher price can go. Young professionals may not want to buy in to the market at the highest price it has been in it’s history. As such young traders are looking to alternative investments which include strategies to take advantage of short term price fluctuations, importantly these can also take advantage of short trades if prices happen to fall. These strategies include managed futures, day trading and Forex trading.

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