Well, I know how I would answer this question. Those of you that know me well will no doubt have answered on my behalf already!
What about you? Are you a DIY’er?
I’m not talking in the conventional world of DIY involving the likes of B&Q or Wickes. No, I’m thinking about DIY in the context of how you manage your own money.
If you like managing your own investments and pensions then great. The majority of people, however, don’t and will instead call on the services of an investment adviser. Similarly, if I need to wallpaper the house, a professional decorator is my first port of call!
The reality is that I could probably decorate if I really put my mind to it but frankly I don’t have the will, the time nor the inclination. The same goes when it comes to managing money. As with decorating, it’s so easy to obtain all the tools, information is available online, numerous books have been written about it and the choice of colours and fabrics (places to invest) is vast. The issue is… “do you really want to do it?”
I enjoyed reading an article from Forbes magazine recently, published way back in 2012. It was entitled “4 questions you need to answer before investing on your own“. It asks, do you have (1) the desire (2) the time (3) the knowledge and (4) the temperament?
Having the time and ability to manage your own money effectively is of no use if you lack the desire. It’s not just about managing at outset but having a sustainable desire.
How much time depends upon your prior level of knowledge and experience, along with the complexity of your chosen investment approach. Be prepared to invest a significant amount of time upfront and be patient through the process.
Successful investing does not require a PhD in finance. What is most relevant is aligning your investment approach with your knowledge level. The problem is that the parameters for investing are changing all the time with economic, geo-political and market factors that require continuous analysis and understanding in order to keep your investments relevant.
Success in investing doesn’t correlate with I.Q. Warren Buffet once said “what you need is the temperament to control the urges that gets other people into trouble“. Investors are habitually their own worst enemies. Everyone knows they should buy low and sell high, yet very often, investors do the opposite. If you have a history of reacting emotionally to market volatility then you may not have the temperament to manage your own portfolio.
We live in troubled times and being able to respond quickly to any market volatility is an important facet of investing.