The Real Cost of DIY Investing
By Net Worth Advisory Group
Investing on your own has never been easier. Online brokerage platforms, low-cost funds, and an abundance of financial information have given investors more opportunities to manage their own portfolios without paying for professional investment management.
For some people, DIY investing can work well. If your finances are relatively straightforward, you enjoy managing your investments, and you have the time and knowledge to do it consistently, you may be perfectly comfortable going it alone.
But saving on advisory fees is only one part of the equation. As your wealth grows and your financial life becomes more complex, managing your investments can require more time and involve decisions that extend well beyond what to buy or sell. Here are some of the tradeoffs to consider when deciding whether DIY investing still makes sense for you.
Advantages of DIY Investing
One of the biggest advantages of DIY investing is control. You make your own investment decisions and can build a portfolio around your financial goals, timeline, and comfort with risk.
Managing your own investments can also reduce the fees you pay for professional advice. Fees matter because even relatively small ongoing expenses can reduce investment returns over time. If you have the knowledge, interest, and discipline to manage your portfolio yourself, that savings can be meaningful.
The question is whether the money you save outweighs the time, responsibility, and potential complexity you take on.
What Are the Drawbacks?
1) It takes time.
Managing your own investments requires more than choosing a few funds and checking your account periodically. You need to determine an appropriate asset allocation, monitor your portfolio, rebalance when needed, evaluate new investment decisions, and stay informed about changes that may affect your strategy.
That may be manageable when your finances are relatively simple. As your wealth grows, however, investment decisions may begin to overlap with retirement income, taxes, estate planning, charitable giving, or other areas of your financial life.
At that point, the question may be less about whether you can manage everything yourself and more about whether that’s where you want to spend your time.
2) Emotions can influence your decisions.
Investing is much harder when markets are falling and your own money is on the line. Even experienced investors can feel the urge to make changes when uncertainty rises.
You might sell after a significant decline, hesitate to invest cash when markets feel expensive, or hold onto an investment because you’re reluctant to admit that your original expectations haven't played out.
Having another person involved can provide perspective when emotions are running high. A financial advisor can serve as a sounding board and help you evaluate whether a change in your portfolio reflects your long-term plan or a reaction to what's happening in the moment.
3) It competes with other priorities.
There is also an opportunity cost to managing your own investments. The hours you spend researching investments, reviewing accounts, monitoring markets, and making financial decisions are hours you can't spend somewhere else.
For someone who enjoys investing, that may be time well spent. But if you have a demanding career, own a business, or simply prefer to spend your free time with family and doing the things you enjoy, outsourcing some of that responsibility may be valuable.
The decision ultimately comes down to how much time and attention you want to devote to managing your wealth.
4) Mistakes can be costly.
Avoiding advisory fees can save money, but a poor investment or tax decision can quickly offset some of those savings.
For example, selling during a market downturn, taking more investment risk than you intended, holding too much of your wealth in one company, or selling investments without considering the tax consequences can all affect your long-term results.
That doesn't mean DIY investors will make these mistakes or that working with an advisor eliminates them. It simply means fees aren't the only cost worth considering when comparing the two approaches.
5) Your financial life may outgrow a DIY approach.
Building a diversified investment portfolio has become relatively accessible. The harder part often comes when your investments need to work alongside the rest of your finances.
As your wealth grows, you may need to decide which accounts to draw from in retirement, when to realize capital gains, how to manage a concentrated stock position, or how investment decisions affect your estate or charitable plans.
You can certainly learn to manage these decisions yourself. But at some point, you may decide you'd rather have someone helping you evaluate how each decision affects the others.
6) The fee may be outweighed by better results.
Paying a financial advisor doesn’t automatically mean you’ll earn higher returns. But the right advisor may be able to add enough value through investment selection, tax-aware decisions, portfolio management, and behavioral guidance to more than offset the cost of their fee.
For example, an advisor may help you avoid selling during a market downturn, reduce unnecessary taxes, improve diversification, or identify opportunities you might have overlooked managing your portfolio alone. Even relatively small improvements in these areas can compound over time.
The point isn’t that professional management guarantees better investment performance, it’s that the cost of an advisor should be evaluated against the value they provide—not simply compared with the fee you would save by doing everything yourself.
Understanding the Real Value of a Financial Advisor
The value of working with a financial advisor extends beyond selecting investments or trying to outperform the market. It can also come from helping you make better decisions across your financial life and avoid costly mistakes. A good advisor can help you build an investment strategy around your goals, manage risk, make tax-aware decisions, and adjust your plan as your circumstances change.
They can also provide perspective when markets are volatile and take some of the ongoing financial work off your plate.
That distinction matters because the comparison isn't simply DIY investing versus paying someone else to choose investments for you. The question is what you're receiving for the fee and whether those services are valuable enough to you to justify the cost.
When to Move Beyond DIY Investing
DIY investing can be a good fit for those who have the time, interest, and knowledge to manage their portfolios. But as your finances become more complex, you may reach a point where you'd rather have professional help evaluating your investments alongside the rest of your financial life.
At Net Worth Advisory Group, we create personalized investment strategies based on our clients' goals, risk tolerance, and broader financial plans. We also provide ongoing guidance as markets and circumstances change.
Are you wondering whether your current investment strategy is still the right fit for you? Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.
To learn more, visit our website.
About Net Worth Advisory Group
Founded in 2003, Net Worth Advisory Group is a Salt Lake City-based, fee-only firm specializing in helping individuals transition smoothly into retirement without fear of outliving their assets. As a NAPFA-registered practice, the firm’s team of CFP® professionals operates under a strict fiduciary standard, offering objective, personalized wealth management free from product-commission conflicts. Through comprehensive financial mapping and disciplined semi-annual reviews, Net Worth Advisory Group is dedicated to bringing clients lasting financial confidence and the freedom to live the lives they have imagined.
.svg)
.webp)