Investing – does it pay to do it yourself?

There’s no denying that ‘Do It Yourself’ (DIY) culture is quintessentially kiwi. In the case of financial services, there are more DIY share trading platforms available than ever before.

But this begs the question – just because you could do it yourself, should you? The answer to this question depends on many factors including your financial literacy and expertise, the time you have available to manage your investments, and your attitude to risk and appetite for fees. Let’s look at these in closer detail.

Fees are a factor

When it comes to fees, DIY investing is usually the more affordable option as you’re not paying for the services of a qualified investment adviser or a professional investment advisory firm. However, lower fees doesn’t mean no fees. For example, frequent trading can result in brokerage and other administration fees being charged, which can add to your costs over time.

DIY investing can be risky without a solid understanding of financial markets and effective investment management. While a professional investment advisory firm like Craigs Investment Partners can be more expensive than DIY investing, the advantage of an investment adviser is their ability to help you create and implement a tailored investment strategy based on your objectives and risk profile, that will set you up for success over the long term.

Control and flexibility

There’s a perception that DIY investing allows you more control and flexibility over your portfolio. However, an expert investment adviser should be responsive to your needs and the level of involvement you wish to have in managing your investments. They should also design a portfolio that can flex according to your needs and situation.

Craigs offers a range of investment products and services to suit your preferred level of involvement. Clients can view their portfolio and reports 24/7 through the Craigs client portal and mobile app. A Craigs investment adviser will take the time to understand your goals, preferences, and risk appetite, helping to create a personalised investment portfolio tailored to your needs.

Financial literacy

While DIY investing can be a way to learn about financial markets, is this something you are comfortable learning by trial and error? Craigs offers a programme of investor education and specialist women’s wealth workshops. And of course, your Craigs investment adviser is your own personal resource.

Craigs’ Private Wealth Research team is one of the largest in New Zealand, and produce market-leading research and global market data, available for Craigs clients to access any time through the client portal and mobile app.

Sounding board

DIY investors may be more susceptible to biases that can influence decision-making. For instance, DIY investors may be inclined to exit investments based on market noise rather than sound investment strategy and research. Other common biases include a tendency to invest in familiar assets or being influenced by discussions with friends or media coverage.

An investment adviser is a sounding board for these decisions and is there to support you through periods of market volatility and help you to stay on track towards your financial goals.

Sara O’Connor, an investment adviser at Craigs Investment Partners says investment advisers are there for you during the highs and lows. “Putting an investment adviser between you and your money can help when markets are volatile. We are there to lean on, use us.”

Peace of mind

O’Connor says working with an investment adviser should ultimately bring you peace of mind. “Think of your investment adviser as an experienced partner on the path to financial security. Sure, you could take the long route and probably get yourself there eventually, but you’re a busy person with lots of other goals and priorities to keep track of. Enlisting the help of an investment adviser can prove to be a wise decision.”

Expertise

Craigs investment advisers have a wealth of knowledge and experience in the financial industry, which can benefit individuals who may not have the time or expertise to manage their investments. Annabel Shand, an investment adviser at Craigs Investment Partners, explains.

“Your Craigs investment adviser can offer you personalised financial advice to help you hit your financial goals and build your wealth. Craigs investment advisers specialise in developing, implementing, and maintaining an investment strategy that supports your financial goals through all of life’s changes, and the market’s changes, too.”

Time to switch?

Sara and Annabel have had several clients who began down the DIY investment route and later switched to engage them as their investment adviser. Common reasons cited for switching are lack of time and energy to manage investments, lack of expertise and changing financial goals and circumstances. Sara says the emotional benefit – peace of mind and comfort that the financial aspect of your life is guided by experts, cannot be underestimated.

“Many of us use experts in other areas of our life, like when it comes to our health and legal matters. When it comes to managing your investment portfolio, the choices you make today won’t just affect you now, or tomorrow, or the next few weeks.”

So, when it comes to investing does it pay to do it yourself? The answer to this depends on the factors outlined above, which includes your attitude to risk and fees, financial literacy and expertise, and available time and energy to manage your investments. When it comes to investing, just because you could DIY, doesn’t mean you should.