Doing things on your own can be empowering, especially if your hard work allows you to hit major milestones. This is why a lot of people dream of running their own businesses or managing their own investments.
Since anyone can learn almost anything online, many are inclined to take their financial futures into their own hands. Adopting a do-it-yourself approach to investing is one way to do so.
Wondering if the DIY route is the right path for you? Explore what this method means as well as its pros and cons.
What is DIY investing?
DIY investing involves managing your investment portfolio independently instead of seeking the help of a professional fund manager. You’ll decide on your own which assets to buy and sell and when to make a move.
DIY investors aim to keep costs low by choosing “discount” brokerage platforms. Such platforms charge low fees unlike full-service brokerages whose commission rates are higher because they offer specialized services.
These services typically include personalized financial advice, market research and analysis, assisted trades, and retirement planning support.
Without access to such services, DIY investors must take on the work of studying the ins and outs of investing. They should also assess their own financial situation, needs, and goals to find good investment options and strategies to match.
Is DIY investing right for you?
Choosing investments on your own requires a certain level of knowledge and skill as well as plenty of time for research, execution, and monitoring. Things may take even longer if you’re new to investing and are starting from scratch.
To know if it’s worth your while, here’s a look at the possible pros and cons of DIY investing:
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When you try to cut costs by foregoing expert support, you’ll likely need to fill the gap in other ways. What professionals do for their clients, you’ll have to do for yourself.
With enough patience and a willingness to keep learning, a DIY approach may bring investing success. Just remember to not be easily discouraged since investing comes with ups and downs no matter what path you’ll take.
If you’d like to keep things simple, you can consider beginner-friendly options like pooled funds. These include Unit Investment Trust Funds and mutual funds.
Since they’re run by professionals, these managed funds offer a relatively affordable way to invest while still allowing you to benefit from expert help.
You may even find investment platforms that offer access to local investment funds minus the sales loads, commissions, and transaction fees.
Having a DIY portfolio can still be an option down the line when you’ve grown more confident in your investing know-how.
