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DIY investing: You may know what to do, but could still mess up your finances

Many turn DIY investors because they are fed up with being at the receiving end of mis-selling by the financial industry

December 25, 2020 / 11:21 AM IST

Dev Ashish

Do-It-Yourself (DIY) is a phenomenon that’s catching people’s fancy across various domains in life. There is a good vibe that people initially get by doing things on their own. It’s like having a feeling of being in total control.

And the investing space hasn’t remained untouched by this DIY bug. Though it’s not new in investing, it has gained popularity in recent times.

DIY investing is when individual investors manage their investments and portfolios without external (professional) advice or guidance.

I am a fee-only SEBI-registered Investment Advisor (RIA) and work with fee-paying clients who require investment / portfolio advice. That is to say that they aren’t DIYs. So if all investors become DIY, then I and other advisors will have problems!


Managing investments not difficult

To be honest, managing investments (or personal finances) isn’t very tough. It isn’t rocket science. Sticking to a few basic time-tested rules, understanding one’s unique situational requirements, being disciplined and having emotional control are the traits required. And everyone can do it. But for one reason or the other, most people end up messing their finances.

Think of it like health. Most people know what they need to do to remain fit and healthy. But they still mess things up health-wise. Isn’t it? The same is the case with investments.

Anyone can be a DIY investor. But not everyone will succeed.

These days, many people, armed with tons of easily available information are trying to manage their investments on their own. Lord Google helps them! On the other hand, many turn DIY investors because they are fed up with being at the receiving end of mis-selling by the financial industry.

The learning curve can be steep for DIY investors. But many of them do well. They are suited to taking things in their hands. But many people aren’t. In investments, just having knowledge about investment products is not enough. It can never be. When things get out of hand (as they always will every now and then – like in times of a crisis and extreme volatility), having experience and perspective helps. And that is something that cannot be learned just by reading things.

Let me give you an example of a recent client of mine.

He was a self-confessed DIY investor till very recently. His learning came from online forums, colleagues, books, etc. But over a period of a few years, he kept investing in various products that seemed good. As a result, he had a bloated portfolio with too many products. I am sure these products would have got entry into his portfolio after some deep thought. But after a while, the portfolio became too large and for lack of better words, messy and directionless. Every now and then, he would get a high as his some investments did better than the market.

But in March this year, when markets tanked, he was unable to fathom as to what to do. In a way (and he acknowledged this), his learnings were good enough but did not provide him with the gut to manage things when the ground beneath him shook viciously.

It was then that he felt he needed external intervention. He reached out to me and we built a goal-based financial plan for him.

Goal-based investing

Taking a holistic approach and investing for goals was also a new revelation for him when it became clear that just beating markets occasionally isn’t enough if he wasn’t investing enough for his goals. If you wish to fund your goals properly, in time and within your chosen timelines, sufficient investments are necessary. He wasn’t investing enough.

Please understand that I am not against DIY investing. I am just saying that many people really do need some professional advice because, at times, they overestimate their abilities of managing investments. This isn’t a problem in good times. But when things turn ugly, they are in trouble.

It may seem that this is in my interest to say all this as I am an investment advisor myself. But this is a fact.

Sadly, most people are after free financial advice, which they end up using as the driving force for their DIY investing. And that can be risky.

I know many of you are doing great in your DIY endeavours. But many others aren’t and things are messy. So acknowledge this. And make timely course correction.

There is a reason why even big HNI investors take financial advice. Isn't it?

And investment advice is not just for the rich.

DIY investing is simple. But not necessarily as easy as it seems. So be true to yourself and figure out which approach is beneficial for you: DIY or taking professional advice.
(The writer is the founder of
first published: Aug 19, 2020 09:10 am
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