Time is money and unless you have both, DIY investing is probably not for you.
Taking on the job of managing investments is becoming more popular with the recent rise of the online trading platform giving easy round-the-clock access to shares, funds and commodities.
But holding down a day job, spending time with family and friends and having a life all impact on a DIY investor’s ability to make their money work and generate an above average return.
So why do people become DIY investors?
Some like the thrill of making money and picking funds and stocks that show a profit.
Others cite the cost of paying a fund manager.
Joining an investment team
But unless the return for DIY investing surpasses the profits professional money managers make, there seems no point to a DIY approach.
Money managers normally head a team of financial experts with expertise ranging from research to supervising assets.
The manager will work with a financial institution or fund that is regulated so customers have recourse to compensation if the advice they receive is poor or the manager runs off with their cash.
The service is personal and usually bespoke to an individual client’s financial circumstances and objectives.
The issue some DIY investors have with wealth or fund managers is the fee they charge. They do not take a commission, but a percentage of funds under management each year.
Why the fee is a problem is confusing. After all, investors would not expect their dentist, lawyer or accountant to work for free, so why baulk at paying a money manager?
Gurus can cost more than a wealth manager
Having the information available to make relevant financial decisions is another aspect of DIY investing. This means poring over market reports, analysing results and keeping track of world events, people and politics.
The task is monumental for an individual with limited time to spend on the job.
DIY investing gurus will try to persuade their followers that going alone is the best way forward but the contradiction is their mentor, seminar and course fees are probably as much as the management fee paid to a professional money manager.
Sure, dealing with a wealth or investment manager comes at a cost, but that price is small to pay for the security of having a regulated professional making the day-to-day decisions for you and the time to claw back that gives you a life.