Professionally managed funds

Dear Mr. Tan,
Is it better to buy a long term investment portfolio offered by banks or to buy company shares directly from a broker? What's your advise?

REPLY
It is better to invest in a professionally managed fund, provided that the expense ratio is kept below 1%.

The advantages are:
a) Diversification. You are invested in a large number of shares, and not in a few shares
b) Stock picking. You do not have to worry about stock picking. It is done by the fund manager
c) Transaction. You do not have to take care of collecting dividends, subscribing to rights issues, paying for share purchases and other tedious tasks. They are done by the fund.

Let the professionals take care of the investments (if the fees are modest).

However, if you have a large sum to invest (say, more than $1 million) and you can afford to spend the time to take care of the investments, you can buy the shares through a stockbroker. You will save the fees charged by the fund, but you have to do the work on your own.