Just because you can, doesn’t mean you should: five questions to decide if DIY investing is right for you
I am embarrassed to admit that this past holiday season (as well as many before it), I sat and ate an entire box of Toffifee in one sitting. That being said, just because I could, doesn’t mean I should. The same can be said for DIY investing.
When I was 18, I got a “hot tip” from the manager at the record store where I worked, on a stock called Archer International. The company was set to be the next greatest thing in surround sound technology for movie theatres. I instantly saw dollar signs and jumped on the investing bus, buying in at about $2/share. Over the next few weeks I watched the shares rise to $9, and then bought more – I was confident that they were going to continue to increase in value. I don’t recall how high they actually went, perhaps around $20/share, but I couldn’t afford to buy any at that price so I basked in the glory of the increased value of what shares I did hold. I started to feel uncomfortable when the price slowly began to move in a downward direction. I started to “sweat” when it hit $8/ share and in a panic, I sold all my shares around the $5 mark, near break even. It was a good lesson for me in DIY investing in so many respects.
Times have changed and DIY investing has become more accessible for the average investor. Here are five questions to seriously consider before you decide to go it alone:
- Are you comfortable with online technology?
- Can you manage investments and financial planning without outside advice?
- Are you up to date and current with news and company information?
- Do you have the time and are you prepared to research investment options?
- Have you considered your level of financial knowledge, needs and investing goals?
Back then, I never contemplated any of the above questions which easily explains why my DIY investing experience turned out as it did. Today, I know that while I am more knowledgeable about investing, my needs and goals and technology, I don’t have the time or interest that is required do invest on my own.
And to be quite honest, with what little free time I do have, I’d rather put my feet up, snuggle with my pup and enjoy the sweet chocolate, hazelnut and caramel that makes the Toffifee eating experience so incredibly delightful.
– Ainsley Cunningham
Founder and Project Coordinator, MoneySmart Manitoba
Manager, Education & Communications, Manitoba Financial Services Agency