How to be Comfortable DIY Investing

Learning how to invest for yourself can feel very daunting. But it doesn’t have to be complicated.  Momma, I’m going to walk you through how to be comfortable DIY investing. First, you will have to determine if DIY investing is right for you.  

If so, then the following five things can help you feel more comfortable DIY investing:

  • Educate yourself and learn what you don’t know
  • Have a clearly stated plan
  • Don’t be afraid to ask for help
  • Start small and add to it as your confidence and comfort level grows
  • Set it and (sort of) forget it

What is DIY Investing?

Before you can feel comfortable taking control of your investing it’s important to first define what DIY investing is.  Do-It-Yourself or self-directed investing is when you the investor (yes you can do this momma) builds and manages your own investment portfolio.

Often DIY investors use a discount brokerage to buy and sell investments.  Personally, I use Questrade for the portion of my portfolio that is self-directed.

This post may contain affiliate links which means I may receive a commission if you purchase through my links.  Please read my disclaimer for more information.

Why do I use Questrade?

The portion of our investment portfolio that is self-directed is invested in broad-based exchange-traded funds (ETF’s). Questrade does not charge for buying ETF’s.  

Well, they charge a nominal exchange fee which is much lower than any major bank charges.  Even though Questrade does charge for selling ETF’s we have no plan to sell anytime soon so things could change by then.

Once I learned how to use the DIY investing platform I found Questrade to be fairly simple to use.  Since we are only buying a few times a year it is easy to remember what to do.

Full disclosure – I haven’t tried every DIY investing platform available so it’s possible that you may eventually find one you like better than Questrade.  But this investing platform is working for me and is something I’m comfortable with.

If you want to check out Questrade use this LINK or click on the banner below to get $50 of free trades when you open an account.

Who is DIY Investing for?

Although self-directed investing is not for everyone, don’t rule it out just yet momma. Take a minute to think if any of these 3 statements resonate with you.

  • I’m willing to learn and save money rather than pay someone to take my money and not educate me
  • I would be comfortable controlling a small portion of my investment portfolio
  • I would feel more comfortable as a DIY investor if I could consult with a professional from time to time

If you answered yes to any of the above statements, then it might be time to think about taking control of (a portion of) your investment portfolio.

Deciding to control your investment portfolio doesn’t have to be an all-or-none decision. It is totally okay to start with a small portion of your portfolio while you “learn the ropes” and get more comfortable.  This is how we started and I feel much more comfortable DIY investing now than I did when we started.

As our comfort and confidence grow, so does the portion of our portfolio that is self-directed.

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Who is Self-Directed Investing Not For

There is no one size fits all when it comes to investing and personal finance.  And I don’t believe that because I’m doing something one way everyone else will get the same results trying to replicate that. So DIY investing may not be for you.

If you’re not quite sure if DIY investing is for you, take a minute to think about if these 3 statements.

  • I am completely intimidated or overwhelmed by anything that has to do with investing –  the market, what to invest in, how to invest…and the list goes on
  • I have never given any thought to what my long term or short term goals are. 
  • Fluctuations in the market scare me and I would definitely be prone to panic selling

It’s okay to admit that DIY investing might not be for you.  But don’t just make that claim without looking into it a bit first.  The easy answer isn’t always the best one.

How to feel Comfortable DIY Investing

So maybe you have now decided that this DIY investing thing might be for you, or at least you’re willing to try. Or possibly you have already started self-directed investing but still don’t feel 100% comfortable with it.  Here are 5 tips to help you feel more comfortable DIY investing.

Tip #1 – Educate yourself and learn what you don’t know

If knowledge is power, then educate yourself until you feel comfortable taking the power over your portfolio.  But a word of caution here – don’t get stuck in the analysis paralysis stage.  Learning is important but taking action is too.

There are many things you can educate yourself on when it comes to investing.  Start with the basics, take action, and work your way up from there.

Tip #2 – Have a clearly stated plan

Having a clearly defined and written down personal investment policy statement (PIPS) can help you weather the storm when the times get tough. And if you’re invested in the market – the times will eventually get tough.

The benefit of a PIPS is that it clearly defines your goals and the type of investor you are. So when bitcoin starts going crazy or the next big flash in the pan comes up you will be less tempted to jump on the bandwagon.

In times of uncertainty, you can always refer back to your written plan. And if you’re uncertain how to come up with your plan you can always work with a fee-only financial advisor to help you come up with one.

Tip #3 – Don’t be afraid to ask for help

Speaking about fee only financial advisors, they can be great resources to help you learn and become more comfortable DIY investing.  

The right financial advisor can help you come up with your personal investment policy statement and can help determine what would be good investments to meet your goals.  Once you have the plan and some direction then you will feel much more comfortable executing the plan by self-directing your investments.

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Tip #4 – Start small and add to it as your confidence and comfort level grows

Investing is sort of like having a child – this is in your wheelhouse momma. Just think of when you brought your little one home, if you were anything like me, you felt like you had no idea what you were doing.  But one day turns into a week and the next thing you know your little one is going to school.

Apply this mentality to your investments, start slow and small.  Invest a small amount that you are comfortable with then slowly add to it over time.  And just like your confidence in being a parent increases with practice, so will your confidence with investing.

Before you know it that small amount you were regularly investing will amass to a very comfortable nest egg.  Just remember not to touch it while it’s growing.

Tip #5 – Set it and (sort of) forget it

This last tip relates to one of the common mistakes that DIY investors make – trying to be too active in their portfolio. Being too active in checking your portfolio frequently can also be a mistake.

If and when the market drops you will probably hear about it in mainstream media – this is not the time to check in on your portfolio. Doing so may cause you to want to panic sell everything because your portfolio has dropped.

The short term swings in the market can be tough to stomach. This is why I recommend only checking in on your portfolio a few times in a year, or at most monthly when you are updating your net worth statement.

If you have a strong long term plan, then short term fluctuations won’t matter.

Now if you are regularly investing by dollar-cost averaging then you may be interacting with your portfolio more frequently.  Just remember to stay the course and follow your plan.

Common DIY Investing Mistakes

One way to be comfortable DIY investing is to educated yourself on the common mistakes that self-directed investors make.  If you can be aware of these mistakes it will be much easier to avoid them.

Mistake #1 – Stop Learning

Sure maybe you make a trade or two that results in a big profit, but that doesn’t mean you can predict the market or know everything that there is to know.  Chances are you got lucky.

The more I learn about the market and investing the more I realize I still have so much to learn.  When we first started investing I never really considered dividend investing.  Now as I learn more about this strategy thanks to My Own Advisor and GenYMoney, I’m starting to understand the appeal of this strategy.

When it comes to investing, ignorance is not bliss.  It could end up costing you a portion of your portfolio in the long run.

Mistake #2 – Trying to Time the Market

Nobody can accurately predict the market and anyone who tells you they can is a liar. Buying and selling constantly is a surefire way to erode your earnings.

Remember it’s not about timing the market but rather time in the market.

Personally we invest our money and then just leave it.  We will check in on it from time to time.  But as we are investing for the long term it doesn’t really matter if it drops or goes up in the short term.

Mistake #3 – Home Country Bias

Home country bias is when your portfolio has increased exposure to your country of residence.

Here’s an example to help clarify this.  

Let’s say you have a portfolio of ETFs that’s 30% Canadian stocks, 30% American stocks, 30% international stocks, and 10% bonds.  In this case, Canadian stocks make up 30% of your total portfolio.  

This would be an example of home country bias because Canada makes up only 3% of the global stock market.

Home country bias isn’t exactly a mistake if you are aware of it and are consciously making the decision to be more exposed to the Canadian market (if you’re Canadian).  But it will impact your returns and would not be considered overly diversified.

Mistake #4 – Being controlled by emotions

There is no room for emotion when investing.  

Over the long term, the market trends upward. But in the short term, it will go up and down like a rollercoaster. If you are someone that can’t stomach rollercoasters, then you may be tempted to panic sell on a downswing.

Self-directed investors that are constantly jumping from one thing to the next are not following their plan and are letting emotions run the show.  This is dangerous and can result in a complete erosion of your investment portfolio.

Why I’m Comfortable DIY Investing

When we were just starting out investing we had no idea what we were doing and were super imitated by the market.  

Whenever anyone talked about investing it seemed so complicated.  What was shorting a stock? What stocks should I buy? What if I lost everything?

But then I realized something very important, I didn’t want to be a day trader. A lot of those complicated investment terms didn’t apply to me.

If you’re feeling super confused or scared about the market, you are not alone.

My Reasons

Over time I learned, and now believe that over the long term the market always trends upwards. (Thank you, JL Collins, for this lesson) Therefore, if I own a small piece of a large diversified portion of the market then my investments will also trend upwards over the long term.  

If I can buy the same funds that an advisor can but for a fraction of the trading fee, then more money will stay in my pocket long term too.

My whole investment portfolio is also not invested in the market. In fact, it’s a relatively small portion currently.  The majority of my portfolio is invested in long term buy and hold real estate that hubby and I self-manage.  In a way, this is also DIY investing.

For this reason, if I do make a massive mistake with my investments in the market, it will suck but not be catastrophic.

I also think that working with the right financial advisor is important.  Yes, we self-manage a portion of our investment portfolio, but we also consult with a financial advisor from time to time.

He has helped us come up with a long term plan and has empowered us to take control of our investments.  Never has he tried to hold us back from investing ourselves.

RECAP – How to Feel Comfortable DIY Investing

Tip #1 – Educate yourself and learn what you don’t know

Tip #2 – Have a clearly stated plan

Tip #3 – Don’t be afraid to ask for help

Tip #4 – Start small and add to it as your confidence and comfort level grows

Tip #5 – Set it and (sort of) forget it

How to feel comfortable DIY investing

Final Thoughts

If you are thinking that DIY investing might be for you then start out with baby steps.  Just like your little one didn’t go from rolling around on the floor to running with perfect form your investment journey will also be a learning process.

I don’t claim to have all the answers but am committed to helping you on your journey. 

Hopefully these tips help you feel more comfortable DIY investing – remember momma, you got this.

2 thoughts on “How to be Comfortable DIY Investing”

  1. I have a lot of home country bias when it comes to my investments. I would eventually like to diversify my holding more globally. It’s just difficult because of the preferential tax treatment that Canadians get on investment returns from Canadian dividend paying companies. 🙂 I like your approach of combining stock and real estate in your portfolio. I’m learning to do the same now.

    1. Liquid – I’m so torn on the whole home country bias thing. On the one hand, it doesn’t make sense to be so heavily invested in Canadian equities because of the small global market share they represent. On the other hand, Canadian investments get preferential tax treatment. I definitely need to dive into this more.

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