It seems like only yesterday that we emerged from our lockdown bunkers ready to face the world again. Some of us were sporting once-in-a-lifetime lockdown tans and others had hair that wouldn’t have looked out of place in a Bee Gees tribute band. Now, with the country experiencing a second wave, and the possibility of a new lockdown on the horizon, it’s got me thinking about how prepared I would be if we were locked down again. What have I learned? How have I evolved? Like Liam Neeson…have I acquired a very particular set of skills that makes me a dangerous lockdown weapon?!
Well, not quite. But when it’s backs against the wall and I’m left with no other choice, it turns out I can cut my own hair, I do have some basic DIY skills (lightbulbs, minor shelving etc) and I can survive way, way longer on a 12 pack on toilet roll than anyone ever imagined!
Perhaps more importantly (at least for this blog anyway), I’ve found out the things I can’t (or just downright won’t) do myself. Global pandemic or not, I draw the line at doing my own dentistry, I’m still not the right guy to fix the brakes on my car and, although I did give it some thought, I am not prepared to risk cutting down a tree in my garden, only to see it sail through my kitchen window (I hired a company called Special Branch instead. Good name, eh?).
So, you may well ask, when is the right time to take the bull by the horns, roll up our sleeves and have a go yourself? And when is it time to call Ghostbusters?! I guess the key to this, and to most things in life, is knowing where your strengths lie. Mine, clearly, lie in waffling…so I’ll get to the point!
This (ahem) crowbars me neatly on to the hot topic of DIY investing. DIY investing, as the name suggests, is an investment strategy that involves an individual selecting their own investments, instead of working alongside a chartered financial adviser or discretionary fund manager to help them with the process.
Now, given the fact that I’m employed by an award winning chartered financial adviser, you may be surprised to hear that I’m actually in favour of DIY investing. I do it myself (as the name suggests), and have done so all my working life. I fully understand the enjoyment people get out of investing; the excitement of choosing your own stocks, trying to beat the market, and making a profit. In fact, many of our clients who have their own investments also tend to be amongst our most engaged when it comes to appreciating the depth of research that goes into constructing the portfolios we manage on their behalf.
However, and as you have probably guessed by now, there is a ‘but’ to all of this, and it’s a pretty big one! Investing is fun, yes, but for the vast majority of people out there it should only be done in moderation. I would urge anyone making their own investment decisions with a significant proportion (or sometimes all) of their wealth to seriously consider if it is the right strategy for them. If you are the kind of person that is willing to ‘have a bash’ at their own root canal surgery, or wouldn’t think twice about ‘making safe’ that old WW2 bomb that Rover has dug up in the garden, then you carry on. Knock yourself out. For the rest of us, it is always a good idea to know when to call in the experts.
Accumulating enough wealth at retirement to meet your retirement income goals, by employing an appropriate, regularly monitored, long-term investment approach throughout your working life is something that should be taken very seriously. Despite what the thousands of different get-rich-quick DIY investing guides on the internet will tell you, it’s not as easy as it is made out to be. Unless you are very disciplined, know exactly what you are doing, and are comfortable spending hour after hour researching your investments, then DIY investing is probably unlikely to get you to the position you want your finances to be in as you approach retirement.
Holistic financial planning
And it doesn’t stop there! If successful financial planning were only about choosing investments then maybe, just maybe, you could put the time in and make some wise investment decisions to see you through to retirement, but it’s not. There are so many other important elements involved. As we travel through the various stages of our lives – first job, purchasing our first home, marriage, starting a family, later working years, retirement, later life, our financial priorities are constantly changing. This is where working with a good financial planner can add significant value.
As well as implementing an appropriate investment strategy, they will help you to make use of your tax-free allowances and make sure your savings are achieving a competitive interest rate and are fully protected should anything go wrong. They will also help you navigate round the complexities of the UK pension system, identify if you have a need for protection policies (should anything happen to you or your family) and help with effective estate planning and inheritance tax mitigation.
I usually like to end these blogs on a light-hearted note, but, this time, that approach doesn’t seem as appropriate. Making the right long-term decisions with your finances is a serious matter and the future, as we are all now only too aware, can be very unpredictable. Best to remove some of the uncertainty by calling in the experts.
Kevin Collie DipPFS
This article is intended for guidance and discussion only and is not intended as specific advice regarding financial planning, which is dependent on individual circumstances.
Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.