The 7 essential traits of DIY investors

[RonBoyd]

The 7 essential traits of DIY investors

Is there anything wrong with do-it-yourself investing? No, of course there isn't. I don't knock anyone who invests without the guidance and expertise of an experienced professional. I'd have my head in the sand if I did. Here are just a few of the reasons why:

1. There are more tools available to the do-it-yourself investor than ever before.
All of the online trading firms offer an array of charts, quotes, research and educational materials. Not to say that investing is easy and that these tools will make you a better decision maker, but some of you reading this will no doubt do a great job for yourselves. Some, dare I say most, will not. Only one way to tell, right? You are more than welcome to try, learn, and grow your net worth on your own.

2. There are more "age-based" portfolio products—also known as target-date funds.
These funds of funds can plot out an investment course over a lifetime, and on something close to autopilot.

3. We also have the rise of the robo-advisors.
These highly advanced computer programs armed with algorithms, data, and speedy processing power can offer you advice on investments and planning. Major financial services firms that have built reputations to help do-it-yourself investors have invested great sums of money into these. And let's dispense with the idiotic broker phrase that I've heard all too often, "Would you perform surgery on yourself, or would you use a surgeon?" As if this metaphor works with investing on your own; pure stupidity for a holder of a securities license to utter.

Last but not least, low commissions are available.

Time to put yourself to the do-it-yourself investor test and ask yourself some tough questions.

 

[2B]

Thanks for the link.

Here's a FA giving a list of reasons that justify using a FA. He neglected to point out that long term buy and hold of index funds with a decent asset allocation beats almost all FAs. He also neglected to say you can learn how to do this from a few simple books and that it can be done successfully a few minutes per year.

I don't see where a fee only FA wouldn't be useful to people expecting or experiencing a major life change. It can be worthwhile to start a DIY plan. I can't see where anyone needs to be continuously ripped off of a hunk of their assets every month.

 

[LOL!]

RonBoyd, thanks for the link. Folks have to read the link since the part quoted in this thread is not really the 7 "traits" discussed later in the article.

We see questions in this forum from would-be or even experienced DIY investors that are discussed later in the article. Did readers see yourself in the write-up?

 

[Which Roger]

The article does make investing sound a lot more complex than it actually is, and is geared toward active investors. For example, trait #6 "Stay Current" is the opposite of what a Boglehead should do, which is tune out the noise.

 

[RonBoyd]

Yes, I had a difficult time deciding what to quote with out quoting the whole article. I decided to go with the "why" and hoped the "how" would be implied in the Subject line.


Of course, being written by a FA, it is slanted in that direction. Nevertheless, I thought it was a pretty well balanced article that pointed out most (if not all) of the issues involved in personal-directed investing.

 

[2B]

Of course, being written by a FA, it is slanted in that direction. Nevertheless, I thought it was pretty a well balanced article that pointed out most (if not all) of the issues involved in personal-directed investing.

In my experience and from what I read on this forum, most wrap-account FAs don't meet these criteria and they are doing it for money.

 

[Midpack]

Not a bad article, and the last paragraph is key to successful DIY investing. Panic selling has ruined more portfolios than most any other mistake? Anyone can build a reasonable portfolio, that's the easy part. It's having the discipline to see it through that's not easily mastered.

Here's the key. It may seem obvious, but it's at the root of this debate. Investing is not an easy thing to do successfully. Bear markets make all of us look like unsuccessful investors while they last. And this is often when investors walk away from the market. So whether you go it alone or seek out a professional, or somewhere in between: Make sure you have a strategy that includes the possibility of—no, the certainty of—corrections and bear markets. That makes for better financial advisors and better do-it-yourself investors.

 

[unclemick]

The article is of course total crap. Sort of why one should believe the Earth is flat. Guilty after 40 plus years of trying all those wonderful things like reading books, going to seminars having brokers, load and no load funds, precious metals, rental RE, joining AAII, etc, etc and hindsight being a wonderful thing I have concluded successful investing is brain dead simple -you do need courage.

So after 1966 - 2006 tap dancing around 60/40 in various forms more or less I faced the truth, threw in the towel bought VG Target Retirement for my retirement funds.

Now if you are male you are screwed - resistance is futile. For medicinal purposes I dabble in a 'few good stocks' and watch football in season.

heh heh heh - Oh yeah that includes a few stocks in DRIPs after I got rid of my broker.. A 40 year journey to enlightenment.