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Do-it-yourself (DIY) investing: the benefits and risks

Do-it-yourself (DIY) investing is a method and strategy in which individual or individual investors choose to build and manage their own portfolios. Also known as self-directed investing.

Do-it-yourself investors typically use discount brokers and investment account platforms versus full-service brokerages or professional money managers.

Do It Yourself (DIY) Investment Tools

For DIY investors, choosing a full-service discount brokerage platform is vital to creating an efficiently managed portfolio. Determining PIA aggregators is also critical in performing comprehensive due diligence and portfolio analysis.

5 steps to invest in DIY

1. Start learning

Financial advisors and experts charge high fees for their knowledge of assets and provisions.

This indicates that if you want to become your own financial advisor, you would like to know the ins and outs of investing.

Naturally, this indicates that you need to constantly read and keep

Get yourself updated on: Investment options available: stocks, mutual funds, land, bank deposits, alternative assets, gold, and more

2. Setting investment goals

Investing without goals is like playing soccer without goal posts. You will benefit from understanding why you are investing, what your goals are, and what is the simplest way to achieve them.

Doing so will make it easier to identify the right assets, your risk profile, and most importantly, limit your mistakes.

Moreover, whenever you achieve a goal with your investment, it will lift your spirits.

3. Create a portfolio allocation plan

At the top of the day, you should put to use all the training and reading you are going to do to become a DIY investor. What better way than to challenge yourself to come up with an investment plan.

Portfolio allocation will be the solid foundation for this investment plan. Essentially, portfolio customization will facilitate your decision on how much money you should invest in an asset, given your risk profile and investment objectives.

Let’s say you’re a 30-year-old DIY investor who wants to retire at 50 (Step #2). I tested FIRE on the web and what most people have to achieve financial freedom in is invest aggressively (Step #2).

Additional research indicates that the assets at your disposal include Indian stocks, US stocks, international mutual funds, small investment funds, and much more (step #1).

Putting all this together and assessing the risk profile, needs, lifestyle and salary, you have realized that you can invest up to 70% of your money in high risk and rewarding assets (Step #3).

4. Use honest and transparent DIY investment platforms

Your money is precious, which indicates that you should do everything in your power to protect it. That’s why you want to choose the right investment platform(s) to get the best investment experience.

This can be difficult as there are so many investment applications in India. What you will do is go back to step #1 and create a list of all the apps that a large number of people trust.

You can read what they have to say about the app, learn the pros and cons, including the fees, and test the app yourself for a little money.

5. Monitor your wallet

Many would say investing is the easy part, and constant monitoring is the real challenge. The honest truth is that you simply can’t stick to the “close it and forget it” principle very often.

You can use the tools to track the performance of your portfolio. An easy Excel sheet can do the job as well. Either way, it’s important to stay on top of your investments to see if they work for you.

Benefits of investing in DIY:

Investing in DIY can save investors from paying commission fees to professional money managers and asset management companies.

Investors also have autonomy when they make their investment decisions according to their time and financial circumstances.

Disadvantages of investing in DIY:

DIY investors do not receive professional advice and advisory services from professional money managers. They are on their own and the learning curve can be steep.

It will also be difficult for DIY investors to manage a good portfolio.

Good portfolio management is not only about taking profits when the market is going up, but also about limiting losses when the market is down. It will be difficult for novice investors to maintain.

Furthermore, financial advisors not only provide advice and assistance in monitoring investment portfolios, but also provide financial advice in other financial areas to their clients such as insurance, accounting services, estate planning and credit features, either by themselves or through a referral network.

The main takeaway:

  • DIY investing may be a way for retail investors to build their own portfolios.
  • Many retail investors manage their own investments, but they will also help out with discount brokers and various types of online investment tools.
  • Investing in DIY can save investors from paying commission fees to professional money managers and asset management companies.
  • Investors also have autonomy when they make their investment decisions according to their time and financial circumstances.
  • DIY investors do not receive professional advice and advisory services from professional money managers.
  • Good portfolio management is not only about taking profits when the market is going up, but also about limiting losses when the market is down.


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disclaimer

The opinions expressed above are those of the author.



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