Managing your own investments

2020 OSC Investor Experience Research Study

Read the full report: 2020 OSC Investor Experience Research Study.
Read the research summary: COVID-19 and the Investor Experience.

It takes a certain type of know-how to manage your own portfolioPortfolio All the different investments that an individual or organization holds. May include stocks, bonds and mutual funds.+ read full definition. Self-directed or do-it-yourself (DIY) investors assume full responsibility for building and managing their investments. It requires time, research, self-discipline, and a willingness to learn the necessary skills.

The 2020 OSC Investor Experience Research Study found that almost a quarter of respondents were DIYers. Of those investors, a majority did so because they obtain enjoyment from it. As for why those investors decided to manage their own portfolios, additional reasons varied, but cost was one important driver. Almost 40% were self-managing their portfolios to save money, while a quarter said they didn’t trust advisors.

1. Planning

Investing on your own takes careful planning. In addition to defining your short-, medium- and long-term financial goals, an investment plan should be tailored to fit your financial situation and personal circumstances. You should understand the risks of each investment you choose and consider how it may impact your overall investment risk tolerance.

2. Financial literacy

Financial literacy is the foundation of money management. According to the survey, seven in 10 investors (68%) say they have at least one challenge to understanding their investments, the biggest being the need for more financial knowledge (30%), followed by confusion surrounding financial concepts (22%) and information not being presented clearly (21%).

3. Time

The OSC Investor Experience Research Study found that an average investor spends 50 minutes per month while the average DIY investor spends 90 minutes on activities related to their investments. As a DIY investor, you might spend this time doing research, keeping up with the latest financial news and regularly monitoring and managing your portfolio.

The investment strategy you choose could also influence the amount of time you spend managing your investments. Active and passive are two different approaches to investing. Actively managing a portfolio of individual stocks and bonds can take more time and effort than managing a portfolio of passive investments.

Active or passive, your portfolio isn’t something you should simply “set and forget.” You’ll need to rebalance your portfolio from time to time as part of the regular maintenance to keep your asset mixAsset mix The percentage distribution of assets in a portfolio among the three major asset classes: cash and cash equivalents, fixed income and equities.+ read full definition close to your financial plan and on track with your goals. For many investors, rebalancing once or twice a year should be sufficient.

4. Control of emotions

Emotion can cloud your decision-making and be harmful to your finances. When investors see a stock rapidly moving higher, they may feel an impulse to buy. The opposite can happen with stocks that are falling in value.

A recent example is the small but significant number of survey respondents (7%) who sold 20% or more of their portfolios due to the COVID-19 pandemic. The small percentage of investors who sold during the early part of the pandemic were significantly more likely to have a high level of stress about their investments, to have a high level of perceived financial knowledge, as well as not be working with an advisor.

Investing your own money requires the discipline to stick to your investment strategy to reduce the impact of behavioural biases on your investing habits. It’s important to try to avoid making snap decisions based on emotion and regularly reflect on the reasons you hold the investments you currently do. For most investors, investing is a long-term pursuit.

While DIY investing can be a successful approach, make sure you’re prepared for the commitment before you consider that route. Be honest with yourself. If you’re unable to put in the time or find yourself susceptible to letting emotions take over during bouts of market volatility, then DIY investing may not be a good fit.

Key point

When trying to decide if DIY online investing is for you, the key is to be honest with yourself about what you can – and can’t – handle.

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