According to data, available with Stockal, millennials account for about 37% of their customer base. There is an influx of Next-Gen investors in the market. With the rise of Fintech platforms and Robo-advisory, younger investors are finding it easy to enter the financial markets and begin their investing journey in a bid to attain FIRE (Financial Independence Retire Early). These DIY investors seamlessly invest through apps and pick instant investment options. Wider access to portfolios and easy-to-use ETFs and index funds add fuel to a DIY attitude in investing.
EIn today’s fast-paced and competitive world with accessibility to varied kinds of lifestyles, entertainment, and educational needs, dependency on a single source of income will not suffice. It has become vital to create multiple sources to support our lifestyles and protect ourselves from financial disaster. Hence, investing has become a vital part of our lives. Unlike the past, today investing in merely traditional fixed income instruments does not meet the purpose, it fails to beat inflation post taxation. This need, to generate better returns, requires an investor to take calculated risks and invest for the long-run.
The attraction towards DIY investing
There are two vital reasons why individuals are attracted towards investing on their own accord:
- a.COST – The older generation of Indian investors have derived the traditional mind-set of handling their finances. They preferred traditional FDs over stocks and MFs. The ideology to pay someone to handle your finances is new to them, this mind-set has trickled into the next generation of investors who prefer earning more than parting a percentage of it with an advisor.
- b. CONTROL – The current financial ecosystem of online advisory gives the investor complete access and control of his portfolio. The initial rush of a positive turn in gains may excite some investors to continue controlling their investments in the future. Robo-advisory and access to information give investors access to the latest products and opportunities in the market.
Yes, saving the advisor’s fee and having complete control over your investments is great, but, are you capable enough to ensure your invested capital does not erode in the process?
Time and experience
Investing is all about time in the market and not timing the market, ask any successful veteran investor, this is the advice you will get. To be able to invest successfully you need to gain knowledge of the nitty-gritty of financial planning and the ability to carefully research the businesses you invest in. Whether it is a stock of a promising business or a mutual fund offered by a reputed AMC, each needs to be thoroughly vetted based on the underlying business, its sustainability, and its future prospects.
As an investor do you have the time, knowledge, and access to such information to prudently act on it?
Most investors give fund selection utmost priority when investing and overlook the important aspects of investing. Understanding the suitability and risks involved in the investment instruments you choose requires:
- Goal-based planning to efficiently set corresponding financial goals
- Risk assessment for understanding your risk capacity and appetite has a low to negative correlation to Nifty.
- Knowledge of the right mix of assets for asset allocation to balance risk and reward
- Clarity on diversification to hedge your investments against currency fluctuation or geo-political risks and more.
Having an advisor by your side while you make these decisions is like consulting a doctor for an ailment. You may have already diagnosed the ailment and a possible cure, but still prefer to let a specialist treat it comprehensively for best results. Taking advantage of rupee-cost averaging by automating SIPs in high-quality funds or reviewing your investment portfolio and rebalance it periodically are some benefits of having an advisor assist you through your investing journey.
Knowledge and diligence help manage and build wealth; if you are equipped with knowledge, time, and prudence, then by all means do tread the DIY investing route. But, if you lack the same, consider investing in an advisor you trust to handle your investments and grow your wealth.