Signs You've Outgrown DIY Investing

When you first start investing, you might have a simple Stocks and Shares ISA containing one or two funds.

Over time, you could end up with several ISAs, a general investment account, workplace pensions, and personal pensions invested in various different funds, stocks, bonds, ETFs and other assets.

Keeping track of everything can become more difficult, particularly if your investments are spread across different providers.

There are risks to not being on top of all your investments:

• You’re unable to monitor where you’re taking too much – or too little – risk.
• You may be duplicating some investments, meaning you’re over-invested in some companies, sectors or geographies.
• Your investments may be too tightly concentrated in one market without enough diversification.
• You may be paying more in fees than you need to.

You don’t necessarily need an adviser just because you have several accounts. But if you’re struggling to see how everything fits together, professional help could give you a clearer picture.

Your investment choices should reflect your goals, how long you have until you need the money and how comfortable you are with the possibility of losses.
But these things can change over time.

For example, you might have been happy taking a relatively high level of investment risk in your 30s, when retirement was decades away. As you approach retirement, you may be more concerned about protecting the money you’ve built up.

Equally, you might have become more comfortable with investment risk as your knowledge and experience have grown.

The important thing is to make sure your investments still match your circumstances.

If you’re unsure whether your portfolio is too risky, too cautious or simply no longer suitable for your goals, an adviser could help you assess your options.

Remember, taking less risk doesn’t automatically mean your money is safer in every sense. If your investments don’t grow enough to keep pace with inflation, your spending power could fall over time.

Building up investments is one thing.

Working out how to use them to support you in retirement is another.

While you’re working, you might focus on growing your pension and other investments over the long term. But when you stop earning a salary, you may need to start drawing money from them to cover your living costs.

This raises some important questions that can be difficult to answer by yourself, such as:

• How much can you afford to withdraw each year?
• Which accounts should you use first?
• How will you manage your investments if markets fall just as you begin taking an income?
• And how will your State Pension and any other sources of income fit into the picture?

There isn’t one answer that works for everyone: it very much depends on your personal circumstances and goals.

Taking too much money out too soon could leave you with less to live on later in retirement. But being unnecessarily cautious could mean you don’t enjoy the retirement you’ve worked hard to fund.

An adviser can help you build a retirement income plan that considers your savings, pensions, spending needs and other sources of income.

Investing involves uncertainty, and even experienced investors make mistakes.

Perhaps you’re tempted to sell your investments because markets have fallen.

Maybe you’re considering moving your money into something that has recently performed particularly well. Or you might be unsure whether to make changes ahead of a major economic announcement.

It’s natural to feel uneasy when your money is at risk.

The danger is making decisions based on short-term emotions rather than keeping a cool head and remembering your long-term plans.

Selling investments after they’ve fallen in value, for example, can turn a temporary drop in value into a realised loss and leave you out of the market if prices subsequently recover.

A financial adviser can provide experience and an independent perspective, and help you weigh up all your options before making significant decisions.

That doesn’t mean an adviser can predict market movements or prevent losses. No one can guarantee investment returns. But having a clear plan based on evidence-based principles rather than emotion can make it easier to avoid decisions you might later regret.

DIY investing can save you money on advice fees, but it can cost you time and effort.

You’ll need to regularly compare funds, research investment platforms, check charges, review your portfolio and try to keep up with financial news.

For some people, this is an enjoyable hobby. For others, it becomes another (stressful) job.

If managing your investments is taking up too much of your time or causing you too much stress, weigh up whether it’s actually worth it. Could the time you’d get back by paying a professional to manage your portfolio on your behalf, be better spent doing something else?

You don’t necessarily need to hand everything over to an adviser. You could simplify your portfolio, automate regular investments or use a more straightforward investment approach.

Alternatively, you might decide that paying for professional advice is worthwhile if it helps you manage your finances more efficiently.

The right solution depends on how involved you want to be and what you’re comfortable paying for.

Some financial decisions can have consequences that last for decades.

You might be approaching retirement, receiving an inheritance, selling a business, getting divorced or planning how to pass money on to your children.

These events can change your financial position considerably. They may also introduce tax considerations that you haven’t had to deal with before.

For example, receiving an inheritance could leave you with more money to invest than you’re used to managing.

You’ll need to think about how much to keep in cash, what to invest, when you might need the money and how your decisions could affect your tax position.

Similarly, planning to pass wealth on to your family may involve considering inheritance tax, pensions and other assets.

You can research many of these issues yourself, but it can be difficult to understand how they interact.

Depending on your circumstances, a financial adviser or tax specialist could help you understand the options available and make decisions that fit your wider financial plans.

You might have a portfolio that has performed reasonably well but still wonder whether you’re missing opportunities to improve your finances.
For example:

• Are your investments spread appropriately?
• Are you using the tax allowances available to you?
• Are your pension contributions on track to support your retirement plans?
• Could you reduce unnecessary charges?

These are all sensible questions to ask, and questions that an adviser is well-placed to help you answer.

However, it’s important not to assume that professional advice will automatically produce better investment returns. No adviser can guarantee that their recommendations will outperform a DIY portfolio, and fees can reduce the returns you ultimately receive.

The potential value of advice can extend beyond investment performance. It may help you make better-informed decisions, understand your tax position, plan for retirement and bring your finances together into one coherent strategy. And for some, it brings peace of mind that a trusted professional is keeping an eye on things.

The key question is whether the potential benefits justify the cost for your particular circumstances.

A strategy that worked well five or ten years ago might no longer be suitable today.

Perhaps you’ve changed jobs, had children, paid off your mortgage, inherited money or moved closer to retirement.

Each of these changes could affect how much you can afford to invest, the risks you need to consider and the financial goals you’re working towards.

Even if nothing major has changed, it’s worth reviewing your investments periodically to make sure they remain aligned with your plans.

You don’t necessarily need to pay for ongoing advice to do this. Some investors are comfortable carrying out their own reviews, while others prefer professional support, particularly when their circumstances become more complicated.

What matters is that you don’t simply leave your investments on autopilot without checking whether they’re still doing the job you need them to do.

Recognising you’ve reached the point where you might need professional advice doesn’t mean you’ve failed at DIY investing.

In fact, it could mean exactly the opposite – you’ve succeeded in taking your finances to the next level.

If you’re now at the point where you’re juggling several pensions and investment accounts, or you’ve taken your investments from straightforward to complex, it may be worth exploring whether professional advice could help. Similarly, if you’re about to move your life on in some way, perhaps start a business, sell some assets, or you want to explore the readiness of your finances for retirement, seeking a professional opinion and advice could make perfect sense.

You don’t necessarily have to give up control of all your investments, either. Depending on the service offered, you might receive advice on your overall financial plan while continuing to manage your portfolio yourself. Or you could ask for help answering one specific question or tackling one specific challenge without needing advice on everything else. You remain in control of your finances.

The aim isn’t to pay for advice you don’t need. It’s to gain confidence that your money is working towards the future you want.