You want to make your money work for you and you’ve heard that there are much more attractive returns in the world of investments than can be achieved simply by allowing your money to sit in a bank savings account. Given the current interest rates offered by banks, you’re probably not wrong.
However, investment markets can be an absolute minefield.

Despite this, during the pandemic, more and more people have started to invest their money using easily accessible online trading platforms and investment tools. But how do DIY investors comb through the huge amount of conflicting advice when deciding how, and where, to invest their money? And is doing it yourself even the best thing for you to do?

Let’s take a look at what it is to DIY invest and at what benefits there are to working with a Financial Adviser.

So, what is DIY Investing?

It seems obvious, doesn’t it? And it is!

DIY investing is simply doing your own research and making up your own mind about how you are going to invest your money in the short, medium and longer terms.

Whether your research brings you to invest your money in individual companies (stocks) or in more complex financial instruments, your aim will be to put your money to work in the hope of achieving the highest possible return from your investments.

You might choose to invest in companies who give dividends from profits; or you may watch your investments in other assets grow as interest compounds year after year. And of course, DIY investing means you won’t be paying a fee to a Financial Adviser.

In short, DIY investing means taking 100% responsibility and control of your invested money.

What is a Financial Adviser?

A Financial Adviser is a professional who provides information and services to their clients based on their current financial situation.
Regulated (in the UK) by the Financial Conduct Authority (FCA), Financial Advisers are registered to provide advice, legally, to their clients.
Here are a few of the key service features of Financial Advisers:

• They help you to understand and manage risk
• They help their clients to build bespoke pension plans and to set short and longer term savings goals
• They help clients to avoid making investment mistakes through inexperience
• They keep firmly up-to-date with regulatory changes which may impact your investments and retirement plan
• They assist in your handling and understanding of tax
• They can set up protection for you and your family
• They can help you to grow and protect your business by offering services such as: o Corporate Financial Planning
• Group Pensions Arrangements
• Group Pensions Arrangements
• Business Protection

Ultimately, you will enter into a long-term relationship with a Financial Adviser – and long-term advice can often lead to far better investment decisions.

The Risks of DIY Investing

With so much investment guidance available online and considering the relative ease at which DIY investing can take place, it can be easy to be blind to risks.

We’ve listed a few key risks to be aware of before deciding if DIY investing is truly right for you:

• Without a finely-tuned and carefully constructed investment strategy you are more likely to lose money in the future.
• Not sticking to such a strategy can lead to investors buying and/or selling too often, which shows a lack of discipline. And discipline is important in investing!
• You are unlikely to gain access to the full universe of investment products available to regulated Financial Advisers. This means your options may be more limited should you decide to DIY invest. And this means your portfolio may lack diversification, which can significantly increase risk. Choosing which investment products are most appropriate to you takes time!
• Continuous research of the various products and investment solutions on the market is essential if you are to maximise your investment performance. This takes experience and it takes time – a lot of it!
• You will have to keep firmly on top of changes and updates around regulations and rules surrounding tax. You guessed it – more time!

Benefits of Financial Advice

Wouldn’t it be great to have a professionally developed and detailed financial plan of your future?
Ultimately, working with a Financial Adviser means entering into a long term relationship, and long term, sound financial advice can translate to much better investment decisions.
Here are just some of the benefits of working with a Financial Adviser:

• Financial Advisers can advise on multiple needs at the same time. After all, Financial planning is more than just investments: it’s about inspiring and empowering you to take control of your finances, no matter how much money you have
• Advisers will help you to understand and manage risk, relative to your current financial situation and future goals
• Financial Advisers are qualified and experienced in delivering the most appropriate investment advice to their clients. This can help you to avoid the common mistakes made by inexperienced investors
• Advisers keep abreast of changes to regulation which may impact your investments over time – saving you lots of reading, lots of action and (yes, you guessed it again) lots of time
• Financial Advisers will free you up from having to sift through an enormous range of products. Instead, they will build your plan by carefully selecting the most appropriate investments which align with your tailored investment strategy

Key Questions to ask yourself

In deciding whether or not to partner with a Financial Adviser, ask yourself:

• Do you have the time to undertake the necessary research to build the most appropriate investment strategy which takes account of your current financial situation and future financial goals?
• Do you have the necessary experience, knowledge or skills when it comes to investing?
• If things aren’t going to plan, are you prepared to take responsibility for any poor investment decisions you’ve made?

Whether you choose to DIY invest or build a long-term investment strategy with a Financial Adviser it is vital that you treat investments decisions seriously.

After all: if you fail to plan, you plan to fail.

Disclaimer

Your capital is at risk. The value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.