If TV ads are to be believed, everyone (and they mean everyone) is better off investing on their own without professional guidance. Platforms alluding to riches, so long as you happen to use their platform, is nothing new. This recent do-it-yourself (DIY) boom of investing has seen more Manitobans than ever trying their hand in the markets. When it comes to your retirement goals, are you better off to seek help or can you really DIY?
The Case For DIY
For many DIYer’s, investing becomes a fun hobby. Spending free time on research, watching market news, tracking investment performance, and bragging about wins are all part of the game. Stock-picking can feel a lot like gambling; seeing your “bet” pay off on a company you support is a guaranteed dopamine rush! If you enjoy the experience, understand the risks/rewards, and keep your taxes/fees/liquidity in check, then you can likely feel good about doing it yourself.
When Not To DIY
There are many, many scenarios where being a DIY investor stops making sense. Some of the most glaring are when:
- The Risk Is Too Great – I think most of us would feel comfortable tending to minor injuries without going to the ER. Put some ice on that sprain or a bandage on that scrape; you can handle it on your own. But at some point, the severity of an injury crosses a line where you know you need a medical professional. The risk becomes too high to try and manage on your own. The same holds true for your finances.
If you’re starting off and only have a few dollars invested, losing it on bad picks isn’t the end of the world as you have time to recover. If you’re within five years of retirement, trying to manage 40 years of building your nest egg, the risk of loss may just be too high to bear on your own.
- It Has Become Too Complex – if your only investment account is a TFSA, you may not need much help in managing your finances. If you own several account types through different institutions, perhaps a small business or rental properties, face looming capital gains or have engaged in complex transactions, it may be time to ask for help. Consolidating, organizing, and unwinding, without making mistakes, can be a daunting task for even seasoned DIYers.
- It’s Too Time Consuming – if you’d rather be on the golf course, the beach, spending time with family, or literally anything else other than managing your finances, it may be time to delegate. I recently had a conversation with a retiree who loved to make his own investment picks but felt like the time commitment was holding him back from enjoying his passions (gardening, cycling, travel, etc..). The time had come to unburden himself from day-to-day management of his money and focus on what’s important to him.
At the end of the day we all must live with the choices we make. If your decision is to make your personal finances your own responsibility, go for it! If you’ve reached a point in your life where you’re not enjoying that responsibility, the downsides outweigh the upsides, or the complexity is too daunting, go hire a professional.
My last word of advice is simply this: being a DIY investor or a delegator doesn’t have to be an all-in approach. Consider delegating the important stuff (tax planning, financial management, investing for retirement or kids’ educations) and keep some “play money” on the side. That way you get to continue enjoying your investment hobby, while keeping it a hobby!
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