Knowing the ABCs of DIY investing

Most people don’t have enough time to do fun things in life let alone enough time manage their investment portfolio to research stocks and shares, keep an eye on their trajectory and pour through company announcements and analyst projections.

But if this is something that excites you and you have time on your hands to nurture your investment portfolio yourself, there is money to be made and you could even pay less in fees if you choose the right platform.

Here we unpack how to go about DIY investing in the right way.

Choose the right investment platform

Most investment platforms are trustworthy but it’s always worthwhile to do extra checks, particularly if it’s a brand or backed by a company you’ve never heard of. ‘All investment platforms are trustworthy, if their website says they are a registered financial service provider,’ says Shane Curran, co-founder of InvestSure.

There are plenty of platforms to choose from including EasyEquities, OUTvest, and investment platforms offered by major banks and investment houses like Absa, Investec, FNB and Standard Bank. Capitec meanwhile offers its customers EasyEquities.

Watch out for fees

The main advantage to DIY investing is that you can compare the costs and decide who to go with. ‘DIY investing allows you to minimize fees paid – brokers can charge an arm and a leg (2% may not sound like much, but they are generally not giving rocket science advice, and doing it yourself can save you 2% or more, which adds up over 50 years plus growth that you missed out on,’ says Curran.

Don’t invest in a platform when you can’t understand its fee structure or if the costs are buried to far down in the fine print for you to find. Make sure it can give you a good overview of your investments, the associated costs, and the ability to pull reports as necessary.

Let robots teach you

Choosing roboadviser platforms is another way to save money. ‘Globally, the roboadvisor model is growing in popularity for investors who want a low-cost investment solution without having to make asset allocation decisions like picking individual shares or Exchange Traded Funds (ETFs).

‘These solutions are not just becoming popular with entry-level investors but also with high-net-worth individuals (HNWI) who are aware of the impact of costs on their total investment return,’ explains Grant Locke, head of OUTvest from OUTsurance.

Take advantage of the various calculators on offer to achieve your savings goals. ‘Initially OUTvest focused on offering short-term “Goals-Based Savings” offerings (Wedding, Holiday, School Education Fund etc) and they built some very cool online calculators to help people work out how they could go about saving and what risk they could take on,’ adds Locke.

Time is precious

If you find you don’t have the time to manage it all then it’s probably best to consult a financial advisor or invest in a unit trust or ETF (exchange traded fund). ETFs are tracker funds that are not managed and because of this you will typically save money on fees.

Investing in a unit trust doesn’t mean you still don’t have some control or choice. ‘Unit trusts give you easy, affordable access to financial markets and can be used to achieve a range of financial goals. When you invest in a unit trust, your money is pooled with that of other investors. This money is then used by an investment manager to buy shares, property, bonds, cash or a combination of these, in local or foreign markets, on your behalf,’ explains Shaheed Mohamed, product development manager at Allan Gray.

Make sure the managers you choose are licensed with the Financial Sector Conduct Authority (FSCA) and have a proven track record. Many asset management firms offer a broad range of local and offshore unit trusts.

If you’re still stuck on which fund to go with, consult a financial advisor. ‘An independent financial adviser can help you construct a plan that speaks to your unique circumstances and aspirations and select products that are suitable for your goals. Your adviser can also help you adapt your plan as your needs change and guide you through volatile periods to help you avoid making irrational, emotional investment decisions that result in lower investor returns over time,’ adds Mohamed.