Do It Yourself (DIY) investing is a popular new investment model in India. Read this blog to know more about what DIY investing means, the benefits and risks of DIY investing, and the easiest way to start DIY investing in India.
February 10, 2021
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If you’re reading this blog, you either want to become a Do It Yourself (DIY) investor in India or maybe you’ve heard of the term DIY investing and want to know more about it.
Either way… we’re here to help and tell you everything you need to know about DIY investing in India. But, remember to speak to a wealth coach before investing your hard-earned money in any asset.
Alternatively, you could take the free risk analysis in the Cube Wealth app as the first step.
What Is DIY Investing?
In “Do It Yourself” or “DIY” investing, an investor makes their own investment choices instead of relying on an advisor. The DIY investor will build, manage and rebalance their own portfolio based on their judgment and reading of the market or economic conditions.
How Does DIY Investing Work?
There are online and offline ways of DIY investing. But DIY investing primarily happens online because investment apps give DIY investors benefits like ease of access, low cost investing, and more.
DIY investors can use these platforms to manage their portfolios, track the markets, automate their payments, etc. This convenience is especially useful for busy professionals.
How Do Investment Platforms Help DIY Investors?
Online investment platforms that can be classified into 2 types:
Robo advisory platforms
Robo advisory platforms give DIY investors access to investment options with little to no human advice or interaction. The investment options are based on mathematical models and AI algorithms.
Hybrid investment platforms like Cube Wealth give DIY investors access to curated investment options but also the option to speak to a wealth coach to identify the right investment choices based on their preferences.
Want to know why investment advice is important for DIY investors? Watch this video
Why Is DIY Investing Popular?
The popularity of DIY investing may be due to years of hard-selling by bank representatives, brokers, and others who are motivated more by their own targets rather than the individual investor’s goals.
On the other hand, investment apps have made it easier for DIY investors to make their own choices. But beyond that, DIY investing gives the individual investor a sense of transparency, control and clarity.
3 Benefits And Risks Of DIY Investing
There are obvious benefits to investing yourself.
Benefits Of DIY Investing
Risks Of DIY Investing
You choose what you want
Your choices may be loss-makers
Practical learning experience
Tough learning curve
You will do what’s best for you
You may not have the knowledge to decide what’s best
Other benefits may include:
Investing on your own may help you save on advisory fees.
More investment choices
Your investment choices won't be limited to a fund house or company.
No hidden fees
DIY investing will help you identify each fee for what it is.
Other risks may include:
Not knowing your risk level
DIY investors may overestimate or underestimate their ability to take risks.
Unclear investment objectives
An investment advisor primarily helps you understand your investment goals, which can be neglected when investing on your own.
Looking at the rearview mirror
DIY investors may fall into the trap of looking too much into historical data and not future potential.
Best DIY Investing Options in 2021
Your DIY investment journey should begin after speaking to a wealth coach. This is important because you need to know your risk level and investment objectives.
After that, you can potentially consider these best DIY investment options for 2021:
1. Mutual funds
It’s a large pool of money collected from numerous investors. A fund manager invests this money in various stocks, bonds, and other securities. DIY investors can choose to invest in:
Debt mutual funds
Equity mutual funds
International mutual funds
Benefits of investing in mutual funds for DIY investors:
Potentially high long term returns
Start with as little as ₹1000
Multiple scheme options
Here’s how hand-picked mutual funds work on Cube
A stock is a publicly-traded piece of a company that you can invest in on the share market. As a DIY investor, you can invest in these options on the Cube Wealth app:
Peer to peer lending puts borrowers directly in touch with lenders. This cuts out the intermediary, who in most cases, is a bank. DIY investors can become a lender on 2 RBI Certified P2P NBFCs using Cube:
Benefits of investing in P2P lending for DIY investors:
Let’s look at the key differences between DIY investing and professional advisory.
1. Portfolio management
DIY investors will have to actively manage their own portfolios. This would require them to track the markets and periodically evaluate their portfolio.
This may be difficult to do with a full-time job. At the same time, it’s unavoidable because your goals rest on your portfolio’s ability to generate returns. Cube makes this easier with one simple view of your entire portfolio.
An advisor will excel at this because it’s their responsibility to actively manage every aspect of the investor’s portfolio. An advisor has a better understanding of portfolio evaluation and the various ways to buy heroes and cut the loss-makers.
DIY investors can lower the overall cost of investing. Advisors may charge what is known as, ‘advisory fee’, that can eat into your profits.
But you must ask yourself if scaling back on costs is a rational choice when you can get expert advice backed by years of investing experience from an advisor.
Most DIY investors have a basic understanding of the markets. It’s all too common to see regular investors buy or sell at the wrong time.
While Advisors may not be able to predict the markets, they know more about the general trends, the data and the various metrics that point to a ‘buy or sell’ decision.
How A Professional Financial Advisor Helps
A financial advisor is someone who tells you what to buy. A good financial advisor suggests what you should buy based on your goals, timeframe, age, financial condition, risk profile, etc.
There are obvious benefits that an advisor can give to a DIY investor such as objective investment suggestions and buying recommendations.
Cube’s advisors even suggest when you should sell an investment. Watch this video to know more about Cube’s advisors
Should You Choose DIY Investing?
DIY investing banks on 2 crucial aspects of the individual investor:
The ability to make your own financial decisions
The art of making the right investment choices for yourself
If you’re comfortable with a & b along with actively tracking the market and periodically re-evaluating your portfolio, DIY investing could work for you.
You would obviously incur a lower investment cost but at the same time, the DIY playbook must include:
Objective investment choices
Accurate reading of finances
Clear investment goals
Easiest Way To Start DIY Investing
DIY and advisory need not be at odds with each other. Cube brings the best of both worlds for DIY investors. That’s why Cube is the easiest way for DIY investors to start investing.
on stock picking, poring over excel sheets, financial news, analyzing market trends, tracking the Sensex, researching company fundamentals, comparing mutual funds, reading financial reports, trying to predict the future & losing your sanity!