By Paul Bullock and Gregory Renn, CFP®

Investing has never been more accessible to the average person than it is today. With the advent of online trading platforms and the abundance of investing resources available, many individuals and physicians have turned to DIY investing in order to take control of their financial futures. 

While this trend has undoubtedly empowered many people to grow their wealth, the real cost of DIY investing may be more than what meets the eye. In this article, we’ll explore the hidden expenses and potential pitfalls of investing on your own, and provide insights into how to optimize your investing strategy for the best possible outcome. Whether you’re a seasoned investor or a physician just starting out, understanding the real cost of DIY investing is essential to attaining your financial goals.

Advantages of DIY Investing

One of the primary advantages of DIY investing lies in the fact that managing one’s own finances can be empowering and rewarding. With this approach, you have full control over your investment decisions, allowing you to tailor your portfolio to your specific financial goals and risk tolerance.

Additionally, it can save you money in the short term by avoiding fees. Financial advisors typically charge advisory fees or commissions for their services, which can add up over time. But it’s also important to remember that DIY investing comes with its own risks and drawbacks.

What Are the Drawbacks?

Now that we know a little bit about the benefits of investing on your own, let’s take a look at the disadvantages and potential costs.

1. Time-Consuming 

One of the most significant drawbacks of DIY investing is the amount of time and effort it can require. Unlike hiring a financial advisor who can manage your investments on your behalf, investing on your own puts the responsibility of research, analysis, and decision-making squarely on your shoulders. This means you’ll need to stay up to date with market trends, research potential investments, and continuously monitor your portfolio to keep it aligned with your goals and risk tolerance.

For the average physician, this level of involvement can be time-consuming and overwhelming. With busy work schedules, family commitments, and other responsibilities, it can be challenging to find the time and mental energy to devote to managing your investments effectively. Many DIY investors often find themselves poring over financial reports, analyzing charts and graphs, and researching new investment opportunities late into the night, sacrificing precious time that could be spent on other hobbies or interests.

2. Potentially Emotionally Stressful 

The responsibility of managing your investments and making crucial financial decisions can be overwhelming, especially when dealing with volatile markets or unexpected events that can impact your portfolio’s performance. Investors may experience anxiety, fear, or uncertainty, especially when faced with losses or unexpected changes in the market. You may also feel a sense of pressure to make the right investment decisions, which can lead to feelings of self-doubt.

Unlike working with a financial advisor who can provide an objective perspective, DIY investors may also become too emotionally attached to their investments, which often leads to poor decision-making. It’s possible they may hold on to underperforming assets for too long, ignoring warning signs or market trends, or make impulsive decisions based on emotions rather than logic. In the end, the emotional stress of investing on your own can take a toll on your mental health, leading to burnout, anxiety, or possibly even depression.

3. Detracts From Important Areas of Life or Work 

Going on your investing journey solo has the potential to detract from your personal or professional life, especially if you’re not prepared to handle the time commitment or stress that comes with managing your investments. For physicians with busy lives, this time commitment can take away from other important activities, such as spending time with family, pursuing hobbies, or advancing your career. This is why it’s critical to be realistic about the amount of time and energy you can commit to managing your wealth and make sure it aligns with your goals and priorities.

4. Costly 

While investing on your own can potentially save money in advisory fees, it’s important to consider the potential costs and risks involved before deciding to go it alone. Many physicians who invest on their own have the idea that they’re saving money, but the truth is that it can be costly, especially for novice investors who lack experience or knowledge about investing. Without the guidance of a financial advisor, DIY investors may make expensive mistakes, such as buying or selling at the wrong time, investing in high-risk assets, or failing to diversify their portfolio. These mistakes can lead to significant financial losses, reducing the potential returns of their investments. 

5. Suboptimal and Risky

Most investors who are not well versed in finance typically lack the expertise or resources available to professional financial advisors. While some DIY investors may have a basic understanding of financial markets and investment strategies, they may not have the in-depth knowledge or experience necessary to make informed investment decisions. 

Financial advisors, on the other hand, have years of training and experience, as well as access to a wide range of investment research and analysis tools that can help them identify the best investment opportunities and manage risks. They provide a personalized investment strategy based on your financial goals and risk tolerance, which can help ensure you are investing in a way that aligns with your needs and objectives. 

Do You Need Help With Your Investments?

As a physician, you have a demanding and often hectic schedule that can leave little time for managing your investments. While DIY investing can be an appealing option for some individuals, it may not be the best approach for people who have limited time and expertise when it comes to financial markets. 

By working with an expert advisor, you can offload the responsibility of managing your investments, freeing up time and mental space for other important aspects of your personal and professional life. At Wellington Investment Advisors, we work to create personalized investment strategies that align with your financial goals and risk tolerance, as well as provide ongoing support and guidance to help you navigate the ups and downs of the financial markets. 

For support on your investment strategy, feel free to contact us in three ways:

1. Schedule a no-obligation meeting with us. 
2. Call us at (812) 333-0874.
3. Email us. Paul’s email is paul@wellingtoninvestmentadvisors.com and Greg’s email is greg@wellingtoninvestmentadvisors.com.

About Paul

Paul Bullock is CEO of Wellington Investment Advisors, an independent, boutique fiduciary firm serving pre-retirees and university faculty across Indiana. With over 32 years of financial experience, Paul is committed to building long-term relationships through thoughtful, personalized investment advice and guidance. He focuses on a disciplined tactical asset allocation approach to money management through a strong understanding of economic and market conditions and strives to build trust with clients by providing sound guidance. Paul understands the hard work his clients have put in to arrive at where they are today and wants to see them succeed in their goals for the future. Paul graduated from the University of Texas with an MBA, as well as a bachelor’s degree in finance, and has been dedicated to assisting clients with their financial needs ever since. When he is not working, Paul enjoys time with his family and is also an avid equestrian polo player who helps raise money for over 18 different charities through his playing. To learn more about Paul, connect with him on LinkedIn.

About Greg

Gregory Renn is a financial advisor at Wellington Investment Advisors, an independent, boutique fiduciary firm serving pre-retirees and university faculty across Indiana. Greg is a CERTIFIED FINANCIAL PLANNER™ professional, a teaching professor of practice at Indiana University’s Kelley School of Business, co-director of the IU-Kelley School of Business Wealth Management Workshop, and faculty advisor to the Financial Planning Association student chapter. Greg’s 20-plus years of professorial experience in the financial industry includes management consulting, derivatives trading, and global banking accounts leadership. All roles have emphasized Greg’s deep desire to consistently add value to his clients and bring clarity from complexity.  

Greg earned his MBA from Indiana University’s Kelley School of Business and his higher education teaching certification from Harvard University. Greg resides in Bloomington, Indiana, with his wife, Kori, and their daughter, Sophia. When he’s not helping clients and students, Greg enjoys spending time with his family and two English Springer Spaniels, Bella and Bo. While Sophia is the musically inclined (piano and French horn) member of the family, Greg and Kori, when not encouraging Sophia’s creative efforts, are avid fans of Indiana University sports and enjoy outdoor activities like kayaking, hiking, and running. To learn more about Greg, connect with him on LinkedIn.