Getting advice makes far more sense than making your own plans, provided you ask the right questions.Advisers cannot guarantee to be right, but they are far less likely to be wrong than basic investors. IFAs will give more unbiased advice than anyone in direct sales, even with commission.Paying for their advice – and investing the commission you would otherwise pay – is usually the best move of all.* The Onions Group: 01494 726688; Chelsea Financial: 0800 0713333; Hargreaves Lansdowne: 0117 9889880; The ISA Shop: 0115 9587555. Building your own investment portfolio is a satisfying and, on past experience, profitable hobby, but it should not become an obsession. Most of the “day-traders” who deal in the hope of making quick profits out of short-term trends actually lose money once they have paid stamp duty and broker’s charges on their deals.

Building your own investment portfolio is a satisfying and, on past experience, profitable hobby, but it should not become an obsession. Most of the “day-traders” who deal in the hope of making quick profits out of short-term trends actually lose money once they have paid stamp duty and broker’s charges on their deals.
If you monitor trends and keep up with market sentiment on a regular basis, you may well be able to beat the market average by “tilting” the balance of your portfolio to anticipate shifts in fashion such as the boom in technology and dot stocks and buying and selling cyclical stocks at the right time. But market-beating is not an exact science: the economic cycle never repeats itself precisely.The turning points can vary, and there is always the risk of unexpected events, such as rapid rises and falls in oil prices, the collapse of a regional currency, a local financial scandal or sudden ups and downs in international tension. Changes can also be quite abrupt, so that investors who miss the turn in sentiment by even a few days or weeks can be a long way behind the action by the time they have mobilised their resources.To build a balanced portfolio that will genuinely maximise returns and minimise risk you will probably need a well-planned portfolio of around 30 individual investments, and that takes time and money to organise.

The minimum you need to invest in a single asset should be at least £1,000 and probably more; otherwise brokers’ minimum commission charges are liable to take too big a bite out of your profits every time you deal.But there is a short cut to building a diversified portfolio – through managed or pooled funds, the generic name for investment trusts, unit trusts and open-ended investment companies. All three types employ professional managers to choose a range of assets to spread the risks for individual investors and hopefully to benefit from professional expertise.Investment trusts are the oldest form of pooled investment, dating back to the 19th century. The money subscribed by investors in a new trust is used to buy a portfolio of investments that are expected to pay dividends and increase in value. Once established the shares in the trust can be bought and sold like any other quoted company.Investment trust shares can be worth more than the combined market value of the assets in which they are invested, but usually their shares stand at a discount to the value of the assets. The current premium or discount is an important piece of information published daily in the financial pages.