Dangers of DIY investing

Common mistakes when DIY investing

Whilst DIY investing may save you the cost of professional financial advice initially, you will be prone to costly investment mistakes that could outway this in the long-term. 


DIY investing is much like any other kind of DIY activity: cost is usually a significant motivation behind the decision to “have a go yourself”. Of course, not everybody puts costs at the forefront of their decision making and there will be some people who prioritise a sense of personal satisfaction and others who believe they can simply do a better job.

Whilst investing yourself might save you from paying professional fees, when you consider the time spent researching investment markets, asset allocation, volatility, and the investment fund choices (to name only a few elements), along with the cost of making mistakes (which can compound over the years), you are likely to end up asking yourself if it was all worth it.

With smart phones, the internet, and the rise of robo-advice platforms, anyone can invest at a click of a button. Taking advantage of this convenience can be tempting in this fast-paced world, but a DIY investor risks a variety of uninformed choices with significant and long-lasting repercussions at stake.

Setting the knowledge required to invest to one side for a moment, Money is so closely intertwined with our everyday lives, thoughts and feelings that is it difficult to separate the two. The overriding emotions that drive DIY investing are generally fear and greed. Even with the required knowledge at your disposal, DIY investing can still lead to some unwanted behaviours and associated risks.

Picking funds with the best track record

Too often, when DIY investing, people log onto a trading platform and choose the best funds or select from a provider’s top picks. It is important to remember that while past performance can be a good indicator to use, it is no guarantee of future investment returns and the funds you choose might not be suited to your circumstances or risk profile.

Taking too much, or too little, risk

Let’s assume you have picked the ‘best’ funds from a list of available funds. These funds at the top are likely to have performed the best, in part, because they have taken more risk. However, have you really thought about how you’d cope if investment returns went the other way, and what you should expect to gain or lose in any year?

Less often thought about, but equally as important, is not taking enough risk. This could mean you end up with less money than you need to meet your financial objectives, but you must first understand whether you can afford to take the level of risk required.

Past experiences can and will affect your attitude towards risk and if you’ve had bad experiences, understandably, you may be reluctant to do it again.

Remember, your objectives and risk profile are unique to you, so it is important that the investments reflect these and making sense of the above is difficult for the average DIY investor.

Lack of diversification

Without understanding the finer details of a fund, you may not know how it is different to any other fund you hold. What assets does it hold, which regions does it invest in and across what sectors or industries? 

Diversification is a key component of risk management and it is important that your portfolio is truly diversified, to reduce your exposure to risk. Holding 5, 10 or even 15 funds does not guarantee sufficient diversification.

A bias towards familiarity

People like to buy from familiar brands, think Apple, John Lewis or Amazon, which rely on their brand loyalty, and the same bias applies when investing. Normally this can translate to investing more into UK markets, or possibly holding direct shares in ‘big-tech’ companies that dominate the news. This can again lead to a lack of diversification within your portfolio and an over exposure to certain sectors or territories or risk.

Overtrading, panic selling and short-term thinking

Patience. It is hard to master without suitable input in the form of professional advice. The inclination is to try and time the markets, but the reality is you will generally be better off over time by being in the markets consistently.      

When DIY investing, it is common to see people sell funds during market crashes or opt to buy certain funds when they have performed well (often months after much of the gains have been made).  However, both are examples of short-termism that can do more harm than good.

Our view is that long-term investing is the better approach and, whilst you may see periods of unwanted volatility and negative returns, with calculated decisions, as required, you will win over the longer term.

Investing without clear objectives

Why are you investing in the first place, what are your aims, what level of growth do you need to achieve these and by when?

If you cannot answer these questions, it may be in your best interest to reconsider investing until you have a more informed view of your circumstances and objectives; your objectives will play a significant part in the amount of risk you need to take to achieve suitable growth levels, and over what timeframe.

Benchmarking your performance can be helpful to know whether your funds have performed well against their peers. This is fraught with difficulty though as you may not be comparing like with like. Moreover, benchmarking against your own goals and objectives is important in understanding whether you are on track to reach you goals and if the risks are justified.

Why use a financial planner?

Clarity and direction

Your investment strategy and financial plan should be tailored to your own individual needs and reviewed periodically to ensure ongoing suitability.

Peace of mind

Know that your investment strategy and wider financial plan is being managed by professionals with your best interests and life goals in mind. Spend less time watching the markets and more time living your life.

Risk managed

Remove the unnecessary risk of DIY investing. A mistake could be costly and result in potentially large losses over the longer-term.


Discover new ways to enjoy your wealth, all whilst your financial planner ensures there is enough to achieve your objectives. By hiring a professional, you have more time to fulfil your life ambitions.

The financial benefit

With the help of a financial planner, studies have shown that investors are better off in the long run thanks to the objective perspective that a financial planner brings.

Research from Royal London suggests that those who seek financial advice are £47,000 better off on average over 10 years.

How can we help you?

Whether you are a seasoned investor or looking to invest for the first time, we can help. Our independence means we have access to the entire market and can create a suitable portfolio for you.

As a Chartered firm we have an experienced and well qualified advisory team, who are supported by qualified technical staff undertaking ongoing research using market leading systems and technologies. 

This ensures that at the point of initial advice, and on an ongoing basis, our clients can be confident they are best placed to achieve their desired outcomes.   

If you would like to discuss your investment options, or if you wish to arrange an initial no cost, no obligation, consultation, then please fill out the contact form below. Alternatively, you can call 01603 706 820 or email

Important information

The contents of this article do not constitute financial advice. 

The impact of taxation (and any tax relief) depends on individual circumstances. This has been prepared based on our current understanding of UK Law, Taxation and HMRC practice, all of which could be subject to change in future.

The value of investments can fall as well as rise and it may not always be possible to receive back the sum initially invested. Past performance is not necessarily a guide to future investment returns.

While considerable care has been taken to ensure this information is accurate and up-to-date, no warranty is given as to its accuracy. This article constitutes a financial promotion.

Follow us

Useful resources

Take a look at our useful resources below to find out more. Additional content is available via our resource centre.

What our clients say

How do we do it?

Our processes ensure we maintain the highest standards and continue to deliver suitable outcomes for our clients..

Contact us

To find out how we can help you, please get in touch today by completing our short contact form.

We have offices in Norwich, Diss, Peterborough, Chichester and London. Other members of our expert team are also available remotely across the UK.