What it takes to be a DIY investor

By Karin Mizgala, MBA, CFP

We’ve seen a growing interest in Do-It-Yourself (DIY) investing over the last few years within two distinct groups of Canadians. In the first group, the interest is triggered by media reports about high and hidden investment fees in Canada. While their concerns are valid, their interest in investing doesn’t go much beyond saving money on fees. What we usually suggest to members of this group is a better understanding of fees and how to minimize the fees they pay.

Group two is often triggered by the same frustration with fees, but members of this group are also genuinely interested in learning more about and getting more involved in their own investing. But is that interest enough? It’s certainly the right motivation, the more you understand about investing, the better able you’ll be to make decisions on your own or with an advisor.  That’s a good thing, but the right motivation is only the first consideration.  There are two traits that are vital to a DIY investor and they almost seem to contradict each other: the ability to make a decision and the ability to hold back on a decision. In an effort to make the “perfect” decision there can be a tendency to get stuck in educating yourself.

If you are going to be a do-it-yourself investor, at some point you have to do-it. On the other hand, once you have made a decision, you will need to tune-out the financial chatter and market fluctuations that could have you flip-flopping your decisions week to week.

Dan Bortolotti, author of The MoneySense Guide to the Perfect Portfolio wrote a great article “Are You Cut Out For DIY Investing” which he has kindly given us permission to share. In the article Dan discusses the two traits above and a lot of other information you should consider before deciding whether you’re really cut out to be a DIYer.