The DIY Investor — advantages and disadvantages of not seeking advice
by Wealth Know How in Stock Market
In this video James Dunn takes a look at the DIY Investor and some of the advantages and disadvantages in taking this approach. It's never been easier to be a self-directed investor but there aren't many tools to help you build a well-diversified share portfolio. James explains the importance of not just specific benefits in stock selection but to consider how it may intelligently complement your current portfolio
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 17 Jan 14
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In this video James Dunn takes a look at the DIY Investor and some of the advantages and disadvantages in taking this approach. It's never been easier to be a self-directed investor but there aren't many tools to help you build a well-diversified share portfolio. James explains the importance of not just specific benefits in stock selection but to consider how it may intelligently complement your current portfolio
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
DIY investors tend to look only at stock selection in isolation, which is the stock tipped to give them the greatest capital gain—and not at the way a different stock might deliver much of that benefit, but more intelligently complement their current portfolio. You should always think in terms of your overall portfolio. Your stocks are there to do a job for the portfolio: if they’re not doing that job, fire them and employ another stock.
Valuation can play a crucial part in stock performance, but the effect of market sentiment driven by economic, regulatory, political and offshore factors may dominate for extended periods. You might have done your homework and chosen a stock, and chosen well: but we know from the GFC that stocks may stay under-valued for longer than you may have planned to hold them. If that’s the case, don’t fall in love with the stock—you want to avoid the situation where “the market remains irrational for longer than you can stay solvent!”
Constructing a well-diversified portfolio is difficult without professional help, but it’s well worth the effort, as it may help reduce performance risk due to unforeseen changes in market sentiment, economic cycle and stock-specific risks.
The investment market is structured such that you can easily take control of your investments: but it’s never a bad idea to seek professional advice — even if it’s just a second opinion. Remember, if you're totally DIY, and something goes wrong — there’s nobody else to blame!