Investing is a great way to grow your wealth over time. With the rise of online trading platforms and easy access to global markets, DIY investing has become increasingly popular. However, it’s not always the best option for everyone. Here are six reasons why you may not want to DIY invest.
1. Scale
Investing with an Authorised and Regulated Company allows you to pool your funds with hundreds, if not thousands, of other investors. This can give you economies of scale, which could offer you access to a larger universe of investment options that you would not have if you were investing on your own.
2. Diversification
Investing through an Authorised and Regulated Company can enable you to diversify your investment portfolio across different economic developments (such as established economies like the G10 countries or emerging economies like India, Brazil, Mexico), wider geographical areas (European, American, Asia, Pacific region), and various asset classes (Shares, Government Bonds, Commercial Property). This level of diversification may not be possible or could be more challenging if you were self-investing.
3. Costs
Investing on your own can come with a host of hidden costs. Let’s take a look at the popular self-investing platform eToro for example. eToro charges various fees including a spread cost (the difference between the Buy and Sell price), overnight fees for positions that remain in place after trading hours, triple fees applied on commodities positions open on Fridays, withdrawal fees, and currency conversion fees on deposit and withdrawal of funds. In contrast, with a pooled fund, the investment company will disclose the Management Fee applicable to your investment portfolio. Depending on the level of active or passive investment, this can vary to suit your needs.
4. Advice
By engaging with a professional advisor, you can benefit from their ongoing review of the markets, their engagement with the Fund Managers that they meet on a regular basis to update on what’s happening in investment markets, and their experience. A professional advisor will be able to devise a suitable strategy for your personal needs, future plans and work with you to ensure as best as possible that you achieve your goals.
5. Tax Efficiency
Working with a professional advisor can help ensure that your investments are set up to benefit you and your family in the most tax-efficient manner. They can work with and for you to ensure that any investments can benefit from either Income Tax Relief, Capital Gains Tax Relief or be passed to your next of kin in a tax-efficient manner as best suits your personal circumstances. Missteps in tax planning can result in unexpected liabilities that can reduce the benefits of investing.
6. Setting Realistic Expectations
When working with a professional advisor, they will outline both the potential gains and losses that your investment could experience. With this information, an informed decision can be made by you as to how you would like to proceed. This insight would not be available by self-investing, and potential pitfalls can be missed which can adversely affect the outcome experienced.
In conclusion, while DIY investing can seem appealing due to the perceived control and potential for high returns, the benefits of professional advice and investment management should not be underestimated. The economies of scale, diversification, advice, tax efficiency, and realistic expectations provided by professional investment management can provide significant advantages over self-investing.
Are you ready to take the next step towards financial growth? Start investing today with Riordan Financial, where you can begin your investment journey from as little as 100 euros per month. Let our team of experienced professionals help you navigate the complexities of the investment world. We’re here to guide you towards achieving your financial goals, whether it’s diversifying your portfolio, optimizing for tax efficiency, or setting realistic expectations.
Contact Riordan Financial today to discuss your investment plans. Together, we’ll take on the world of investing.
WARNING: The value of your investment may go down as well as up. If you invest in any pooled funds you may lose some or all of the money you invest. Past performance is not a reliable guide to future performance. Pooled funds may be affected by changes in currency exchange rates.
