Support your DIY investing strategy with professional advice

“The pandemic has changed the way we spend our time and money,” says Jimmy Ha, CIBC’s Senior Director of Direct Investing and Advice. “Over the last year, we’ve seen people learn how to cut their own hair, do their own renovation projects and even create crafts to sell online.”

This DIY approach has extended to investing, with investors choosing to build and manage their own portfolios. In 2020, we saw millions of Canadians who were at home during the pandemic discover trading online and become DIY investors.

Ha says that in 2020, Canadians opened more than 2.3 million DIY accounts. In addition, nearly one in three Canadian millennials (33.7%) say they plan to quit working with their advisors or are seriously considering it, according to a recent report from global comparison site Finder.com Opens in a new window..

Some of the benefits that have helped the rise of DIY investing include a wide range of investment choices (including stocks, ETFs, options, etc.), no investment minimum, convenience and low trading fees.

But make sure you think about all aspects of taking on an entire investing strategy yourself. Here are some things to consider:

1. Your goals — What do you want to achieve? Will you be able to succeed on your own or do you need a professional to help you?
2. Your risk tolerance — How much risk can you handle? Risk with DIY can be higher as the onus lies solely on you to make all the decisions and build your portfolio.
3. The time you have available — this is a big one. How much time do you have to do research and stay current? Between work, family and other commitments you may have, it can be challenging to find time.
4. Enjoyment — Do you really enjoy doing the research and learning about financial markets and financial instruments? If you don’t enjoy it, DIY may not be the best choice for you.
5. Knowledge and confidence — Do you have enough knowledge about how financial markets work and are you confident enough to make financial decisions on your own? If not, this could lead to situations such as a lack of diversification in your portfolio, which could leave it susceptible to the effects of market volatility.

When you work with an advisor to manage a portion of your portfolio as a complement to your DIY strategy, you benefit from tailored professional advice, investment expertise and time savings.

Ha says that these factors become especially important during times of market volatility when investing can become stressful and emotional. It’s the emotional aspect that could lead to excessive trading, which is usually an indication you’ve lost sight of your investing goals. Too much trading can also introduce tax implications you may not have considered.

When you work with an advisor, you don’t have to spend time on tasks such as research and trading, and can benefit from your advisor’s suggestions for tax considerations.

Working with an advisor can also be good for your mental health. In fact, Financial Planning Canada’s 2021 Financial Stress Index showed that Canadians who worked with a financial planner are more hopeful about their financial future than those who don’t work with a financial planner (73% versus 56%).

Other benefits of working with an advisor include:

• Access to innovative planning tools (like CIBC GoalPlanner) to help you plan for and visualize your future goals;
• A holistic approach to your finances to help you identify any gaps and opportunties in your plan.

If you want to try DIY investing, the best way is to develop a strong financial strategy as a base. That’s where your advisor comes in. Working with a professional to first create a personalized plan helps you establish a solid foundation for your future financial success.

Ha says that combining DIY investing with managed investing is like building a treehouse. Before you construct the house, hire a professional to build a strong foundation for you. Then you can go to other sources for ideas and to learn how to construct the actual treehouse on your own (the DIY portion of your portfolio).

Speak with your CIBC advisor for help on complementing your DIY strategy with a managed portfolio. If you’re looking for an advisor, meet with us Opens in a new window..