How to Make Your Money Work Harder by Partnering With a Wealth Expert

DIY investing looks like a smart way to save money at first glance. However, the saying, "If you think hiring a professional is expensive, wait until you hire an amateur," holds true. This wisdom rings true in the ever-changing world of financial management, where mistakes can cost you substantially more than professional fees.

DIY investing sounds straightforward, but is it worth the risk? Managing your own investments has appeal, but behavioural mistakes can derail your hard work and financial goals. People who handle investments independently often face greater financial losses over time. The upfront savings might look tempting, but money management brings crippling anxiety to many people across the globe – anxiety that expert guidance can easily alleviate.

This piece breaks down the real costs and benefits of both approaches and helps you decide whether going solo or seeking professional help makes more sense to secure your financial future.

The appeal of DIY investing

DIY investors are growing in numbers, thanks to better technology, online trading platforms, and people's desire for financial independence. The ability to make personal investment decisions attracts most people to this approach. Nearly 45% of self-directed investors choose this path because they enjoy making their own investment decisions.

What makes DIY investing so appealing? You get complete control over your financial future. Your computer or smartphone lets you pick any investment product or asset class and decide the best times to buy and sell. The numbers show that 56% of self-directed investors use computers to trade, while 21% prefer their smartphones.

Affordable costs are a giant draw. More than one-third of DIY investors go solo because financial advisors are too expensive. Most discount brokers now offer free trading without minimum account requirements. Traditional management fees usually take 1% of your assets each year, which substantially affects your long-term returns.

On top of that, DIY platforms give you easy access to research tools, stock quotes, and interactive performance charts. You can track investments live and base your decisions on current data.

Self-directed investing lets you build a portfolio that matches your interests and values. Investors love putting their money into industries or companies they believe in.

Today's digital world has made investing available for everyone. A few clicks are all it takes to open self-directed broking accounts and trade securities. This move has opened up financial markets to people who couldn't participate before because of high entry barriers.

DIY investing helps boost your financial knowledge. You learn about markets, economic principles, and risk management when you research and choose investments. These skills prove valuable beyond investing and help with other money decisions.

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The hidden risks of going solo

DIY investing may appear appealing, but many self-directed investors are unaware of the hidden dangers in the digital world. Research paints a sobering picture: DIY investors typically lag behind market performance. A key study shows equity investors earned just 6.81% annually over 30 years, while the S&P 500 index returned 9.65%.

What poses the greatest threat to your portfolio? Emotional decisions. Investors often let fear and greed control their choices. Such behaviour leads them to buy when prices are high and sell when they're low – exactly what you shouldn't do. Behavioural finance experts tell us that losses hurt more than gains feel beneficial, which explains why people hold onto failing stocks too long.

Market swings create serious challenges. Markets react strongly to news, and uncertainty often causes worse reactions than actual bad news. Without professional help, DIY investors must handle these market storms alone.

Technical problems can throw off your investment strategy completely. Trading platforms sometimes crash during volatile markets, blocking trades right when timing is crucial. Canadian markets saw this firsthand – new DIY accounts more than doubled in 2020, with over two million new accounts opening.

Self-directed investors face other common problems. They either put too much money in familiar investments or spread their money too thin. Asset allocation drives 90% of long-term returns, not individual stock picks.

People often overlook tax efficiency. 45% of investors don't know which taxes apply to their investments.

What's the final conclusion? DIY investing entails hidden costs that gradually reduce returns. These costs can end up being nowhere near what you'd pay for professional management.

How a Wealth Expert changes the game

Professional investment management significantly transforms your financial journey, surpassing the scope and impact of mere portfolio selection. Research shows professional advice can add up to 5.1% to portfolio returns over the long term, depending on the calculation method. Several key advantages make such an increase possible.

A Wealth Expert has special expertise that most people don't have. They give full-time attention to research and analysis. They use advanced computer technology and data retrieval systems that individual investors can't match. The total capability these professionals represent is "an incalculable multiple of that of any single person".

Professional managers develop personal investment strategies that match your specific needs, risk tolerance, and financial situation. They take an integrated view of your finances and ensure your investments line up with your broader goals while maintaining sufficient diversification to minimise risk exposure.

The time-saving benefits are equally valuable. Making investment decisions for yourself can be "a daunting and time-consuming process filled with doubts." Professional managers handle the administrative burden, portfolio monitoring, and regular rebalancing that most DIY investors find challenging to maintain.

Professional managers effectively protect you from your own behavioural mistakes. Studies reveal that DIY investors earned just 2.1% annual returns over a 20-year period, while the S&P 500 averaged 8.2%. This massive performance gap often results from emotional decision-making that professionals help clients avoid.

Tax efficiency adds another advantage. Managers assist with capital gains management, tax-loss harvesting, and other strategies that preserve wealth. They help optimise your tax situation.

We would be delighted to discuss how we can assist you in navigating the challenges of future planning. Please contact us to organise a meeting.

Market volatility requires professional managers to provide vital emotional discipline that keeps investors from abandoning well-designed plans. Advisors may add "tens of percentage points of value, rather than mere basis points" during these times. Such volatility can potentially offset years of advisory fees with a single critical decision.

Conclusion

Your financial goals, knowledge level, and comfort with risk determine the choice between DIY investing and professional management. Managing your investments definitely offers freedom and apparent cost savings. Research reveals that most self-directed investors significantly underperform the market. This performance gap, not management fees, represents the true cost of going solo.

Professional management provides value that extends far beyond simple portfolio selection. Expert advisers create measurable returns through specialised knowledge, disciplined strategic execution, and protection from emotional decision-making. They handle time-consuming tasks like research, rebalancing, and tax optimisation, which many DIY investors find hard to consistently maintain.

Your investment experience is like climbing a mountain – challenging terrain needs proper equipment and experienced guides. If you want to know how we can help you plan for your future, let's talk. Please feel free to contact us to arrange a meeting.

This decision needs careful thought. DIY platforms make investing available, but professional guidance often proves budget-friendly when measured against long-term results. Self-directed investing's original fee savings might feel good, but these savings are nowhere near the potential growth a professional manager helps secure over decades. Successful investing depends less on avoiding management costs and more on maximising returns through expertise, discipline, and strategic planning.