Many of our readers are DIY investors and, with the multitude of financial blogs and online information available, there is obviously a huge growing interest in managing your own investment portfolios.

Investment do-it-yourselfers generally fall into two categories:

  1. Investors aiming to reduce fees.

Over the last several years the media reports of high and hidden investment fees in Canada has triggered a DIY interest. In fact, for these investors their only interest is to reduce their fees.

“I’m paying all these huge fees and the only thing I’m getting is poor performing mutual funds. I might as well manage my money myself.”

While reducing investment fees should be of primary importance, it shouldn’t be your only concern.

Many of these investors fire their advisers after “years of bad returns.” Then, fortuitously, a galloping bull market begins just as they take over and they crow about how great they are at investing. Of course, this false confidence disappears when the inevitable falling market occurs and they realize that they do not have the skill set or behaviour required to be successful for the long term.

  1. Investors who are interested in the investing process

There are some investors who are genuinely interested in learning more about finances, and want to get more involved in their own investing. The motivation is there to educate themselves and do the necessary research. The more one understands about investing, the better one is able to make sound decisions.

Is being “interested” enough?

The downfall in educating yourself and researching all possible investment choices can be the tendency to get stuck in inertia as you dither about trying to make a “perfect” decision. Do you buy index mutual funds? ETF? Individual stocks? Dividend paying or growth stocks? Vanguard or iShares?

Just do it

If you are going to be a do-it-yourself investor, at some point you’ll have to “do-it.” Don’t try to time your entry point. There is an enormous opportunity cost of doing nothing while waiting.

Once you’ve made a decision you must tune out all the chatter and market fluctuations that can have you second-guessing your choices.


Most investors are capable of managing an index or total market fund portfolio. It’s simple, not time consuming, and it will give you a very diversified portfolio.

If you like individual stocks, a buy-and-hold strategy of dividend payers may be suitable for your temperament.

Don’t add too much unnecessary complexity to try to boost your returns.

Final thoughts on DIY investing

DIY investing requires a commitment of time and energy to become financially literate, as well as an understanding of emotional barriers that can get in the way.

Being exuberant during a bull market, or worried upon a market crash is part of being human, but successful DIY investors need to ignore their impulsive nature.

According to tons of research that has been done over the years, it’s unfortunately true that only a small percentage of investors really succeed in managing their investments well.

What made you become a DIY investor? Are you good at managing your portfolio, or do you sometimes tend to fall prey to inertia and waver in your decision-making? In your opinion, how successful have you been?

My New Year’s challenge to you is to review your portfolio to make sure it’s still consistent with your long-term goals at a level of risk that you are comfortable with.

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