“Do it yourself” investing is nothing new. Amateurs have been grinding away and managing their own portfolios for years now. But new tools and services have fueled tremendous growth in the DIY investing area. Studies indicate that anywhere between one and two thirds of investors are investing independently…
And emerging from the economic downturn, more and more investors are seeking to be personally involved with their portfolio while many financial advisers have suffered a loss in the degree of trust that others hold for them.
Independent investors are also privy to better information than ever before. This is, of course, due to the expansion of the internet and the enterprising companies that have taken advantage of it. Add to the traditional internet the advent of smartphones and apps, and much of the data and analysis that would otherwise be difficult to obtain is now at a consumer’s fingertips. Along with this new access to information, there are also more and more ways for people to use this information themselves. Portfolio tracking software and asset management programs are becoming both more advanced and more popular since they make it easy for the DIY investor to manage their portfolios effectively.
The explosion in popularity of ETFs is another reason for the boom in do it yourself investing. Almost every serious investor already knows about the importance of diversification, and ETFs provide a low-cost way to diversify a portfolio without having to micromanage a varied basket of stocks individually.
Finally, the expansion of social media communities has made DIY investing bigger than ever. This isn’t simply referring to Facebook or Twitter, either. Discount brokers and investment software companies often have forums and communities built into their own websites. This allows for peer-to-peer investment communication in ways never seen before.
While many people are still most comfortable with the traditional broker-based methods of portfolio management, with so many new tools and options, it doesn’t look like the DIY investing trend will be reversing any time soon. And we think that’s a good thing.