By the looks of it, Do It Yourself or DIY investing is here to stay. Historical hard selling by bank executives and the advantages of investing on your own using an app like Cube has made it easier for DIY investors to create wealth on their terms.
In this story, we’ll look at the pros and cons of DIY investing compared to investing with a financial advisor. Towards the end, we’ll tell you why a mix of both is crucial to getting the best out of your investment.
What Is Investment Advisory: The Traditional Investment Model
Traditional investment advisory or the most common form of investment advisory available to an Indian investor involved a bank employee or salesperson who would sell them investment options.
Most working professionals relied on these advisors because they did not have time or inclination to learn more about finances and investment options.
As a result, it was all too common to see bad funds or investment options being sold to investors. These investment options failed the investor because it was done to reach a sales target than to fulfil the investor’s needs.
This hard selling and the rise of investment apps like Cube have helped investors take control of their investments. This is known as Do It Yourself (DIY) investing.
What Is DIY Investing: The New Investment Wave
Investors these days prefer to understand the investment, choose investment options themselves, and manage their own portfolios. This is known as Do It Yourself or DIY investing.
DIY investing allows investors to be in control of their investment choices. Above all, DIY investors are encouraged to be actively involved in tracking the markets and their investment portfolios.
DIY investing primarily happens online because apps like Cube add an extra layer of transparency with clear information about fees and the option itself.
The traditional way of investing with advisory involves a lot of paperwork. The fees can get lost in translation if the investor doesn’t understand finances or the option itself.
But DIY investing puts the onus on the investor to understand both the investment option and the fees. Investment apps like Cube make it easier by showing you everything you need to see in one simple view.
5. Learning experience
The DIY journey involves learning by doing. Some would argue that this is the best way to learn anything, especially investments and finance. The DIY investor will learn about:
How the markets function
Various types of stocks and funds
Making crucial investment decisions
Building a portfolio
Watch this video to learn how DIY investors can build the perfect portfolio using Cube.
3 Cons Of DIY Investing Vs Investment Advisory
1. Making the wrong choices
There are too many investment options and selecting the right one can be overwhelming especially if the DIY investor is a busy professional. This can lead to bad investment decisions.
A mix of DIY and advisory is helpful in such cases. Watch this video to learn more about the importance of having a proven advisor.
2. Not being objective
Your investments should be the one place where emotions should have no bearing. Getting emotionally invested rather than objectively investing in a stock or fund may have negative effects on your financial health.
A good advisor, on the other hand, will always have objective and fair recommendations for you to act on periodically.
3. Banking on past performance
It’s important to know about past performance but it can only tell you so much about the future potential of the same investment. Looking at the rearview mirror too often can lead to bad investment decisions.
This is where an advisor excels. They have the necessary insight to know that the past is not an indicator of future success. Advisors always have an eye on the present with a focus on the future. They will employ various strategies to identify the best investment for the future.
What Is Better: DIY Or Investment Advisory?
It’s not optimal to pit DIY investing against advisory. A good investor makes the best use of all available resources. Especially ones that give you access to fair and curated advice like the Cube Wealth app.
DIY investing has its benefits like low expenses, more investment choices, everyday learning, and more. But there are risks of picking the wrong option and not being objective about investment choices.
Granted, advisory of the good kind wasn’t always available to Indian investors in the past. But a good financial advisor can help DIY investors narrow down investment options based on their goals and needs.
DIY investing is for someone who is willing to:
Actively track the market
Rebalance their portfolio
Understand investment options
Make objective investment choices
If you’re a busy professional, DIY investing can be difficult but not impossible. The Cube Wealth app makes it easier for busy professionals to create wealth.
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!