The Pros and Cons of DIY Investing

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Becoming a do-it-yourself (DIY) investor is what I consider one of my greatest financial victories. It wasn’t an easy decision, truthfully, it was pretty scary at the start. Saving always came naturally for me, but now I would be responsible for all my investment decisions. I was well aware that one mistake could ruin my finances, but it was a challenge I was ready to take on.

Not everyone is comfortable about their finances like I am which is why you need to consider the pros and cons of DIY investing before committing. You may find that it’s something you’re interesting in taking on, but if you decide to let the pros handle your portfolio, that’s okay too.

The Pros and Cons of DIY Investing

The pros of DIY investing

Lower fees – This is  the main reason why people become DIY investors. The fees charged by financial institutions are insanely high. A management expense ratio (MER) of 2.5% may not sound like a lot, but it adds up over time. Compare that to the .20% average of exchange traded funds (ETFs) and we could save hundreds of thousands of dollars over the life of our investing years. I much rather pocket that money than pay someone else

More choice – Stocks, bonds, ETFs, and guaranteed investment certificates (GICs) are just some of the products we can purchase as a DIY investor. That’s not to say those aren’t available to us when we’re working with a financial institution, but in most cases, they’ll have a bias towards their own product. We can even invest with non-traditional options such as stock futures or options.

Preferred risk tolerance – I always found it odd that those risk tolerance questionnaires usually consisted of less than a dozen questions. I get that it’s meant to keep things simple, but I don’t think they really give a clear picture of our risk tolerance. I personally have a defined benefit pension (which I treat as a giant bond) so I invest 100% in equities. As a DIY investor, you can determine your own risk tolerance and set your asset allocation accordingly.

It’s not that hard to figure out – It took me about 20 hours of research before I really felt comfortable about investing. I started off by reading a personal finance book and then followed that up by reading about the couch potato strategy. With all the online resources available, I was able to make informed decisions. Don’t get me wrong, it was intimidating at the start, but it was thrilling to be in control of my own portfolio

The cons of DIY investing

Research – Being a DIY investor requires research. The 20 hours of research off the top I mentioned is a bare minimum, but we should expect to spend much more time doing research if we plan on investing in stocks. Stock picking isn’t necessarily complicated, but we do need to have a good understanding of them so you can make informed decisions when we’re ready to buy or sell.

Time management – Obviously research requires time, but even index investors need to spend some time reviewing their portfolio every year. Some people have absolutely no interest in even taking 5 minutes of their own time to worry about their portfolio.

It can be complicated – Despite the fact that DIY investing can be pretty simple, it can still be complicated for some people. Not everyone understands risk tolerance and asset allocation. Even if we do get how it works, we might be tempted to make bad decisions when the markets aren’t doing well.

You’re the only one to blame – I would argue that this is a pro, but it’s more of a con in the long run. As a DIY investor, we’re responsible for our portfolio, all the decisions are made by us. We could be investing in the wrong products or selling at the worst time. We have no one to blame but ourselves when things go south.

Final word

The pros and cons of DIY investing always need to be considered before we make a decision. Not everyone is comfortable managing their own finances, but for some, the lower fees are well worth the additional time spent.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi


  1. bigcajunman on July 18, 2016 at 8:22 AM

    I think if you stay with a simple “Couch Potato” methodology, which calls for little intervention, you will do fine, it is if you wan to “beat the market” that you can end up in trouble.

    • Barry Choi on July 18, 2016 at 8:32 AM


      Agreed, I still use the couch potato strategy, No need to go off course.

  2. […] Money We Have shared the pros and cons of Do It Yourself investing. […]

  3. Marie on March 21, 2017 at 10:39 PM

    Finally a perspective on how to factor a defined benefit plan into asset allocation. A giant bond, very interesting take.

    • Barry Choi on March 21, 2017 at 10:41 PM


      It pretty much is a giant bond since it’s guaranteed monthly income. If I ever leave my job and no longer have a DB pension, I’ll have to adjust my asset allocation.

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