{"id":5876,"date":"2015-05-27T05:45:11","date_gmt":"2015-05-27T12:45:11","guid":{"rendered":"http:\/\/blog.paladinregistry.com\/?p=5876"},"modified":"2015-06-01T13:42:58","modified_gmt":"2015-06-01T20:42:58","slug":"3-diy-investing-pitfalls","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/","title":{"rendered":"3 Do-It-Yourself Investing Pitfalls"},"content":{"rendered":"

Whether looking to upgrade the kitchen, find a new job, or decide which positions to buy for a 401(k), you must decide: should you do it yourself or consult a professional? While the dangers of trying to do your own electrical work are more evident, do-it-yourself (DIY) investing also carries risks for those who aren\u2019t careful.<\/p>\n

According to a recent study<\/span><\/a><\/span><\/strong> by Deloitte, 52% of respondents were not working with a financial professional for retirement planning, saying they preferred to handle it themselves. Note however, that of those who opted for professional services, 60% felt \u201cvery secure\u201d about their retirement, compared to only 32% of respondents who were managing their own retirement investments.<\/p>\n

What might account for this large gap? Let\u2019s review three of the pitfalls of do-it-yourself investing.<\/p>\n

#1 – Investing without a plan<\/strong><\/p>\n

One of the common mistakes DIY investors make is failing to create a proper plan before they invest, and sticking with it after they\u2019ve started. Without considering their risk tolerance, time horizon, and appropriate asset allocation, investors could be exposed to too much \u2013 or not enough \u2013 risk given their financial goals. Even when an effective asset allocation of diversified investments is implemented, neglecting to rebalance a portfolio to maintain the optimal asset mix will undermine the original strategy. Of course, if an investor does remember to rebalance, but has created an asset allocation based on flawed assumptions, that creates problems as well.<\/p>\n

#2 – Overlooking Tax Implications<\/strong><\/p>\n

Taxes are complex, and investors don\u2019t always realize the tax implications behind their investment decisions. Nearly every financial decision has the opportunity to create a taxable event \u2013 either now or in the future. The DIY investor may not realize the higher dividend payout in a particular ETFcould result in an increased tax liability that year if held in a taxable account. This is only one small example \u2013 strategic tax planning spans all aspects of your financial life.<\/p>\n

#3 – Performance, Performance, Performance<\/strong><\/p>\n

Of course performance is important \u2013 it is a central reason we all invest. But independent investors often chase performance<\/span><\/span><\/strong><\/a>, which can lead to poor investment decisions, bad timing, and actually a worse overall return. Even in well-performing investments, future returns are only speculative. Moreover, the asset may not be an appropriate investment given your personal risk tolerance and current asset allocation. When investors chase performance, they tend to buy high and sell low. Not only is this an ineffective strategy for producing satisfactory returns, excessive trading leads to unnecessary fees and could potentially trigger a tax liability.<\/p>\n

Investing can be complicated<\/span><\/span><\/strong><\/a>, both fundamentally and emotionally. It can be difficult to weather market volatility when you can\u2019t make decisions objectively. If you\u2019re a do-it-yourselfer and are considering working with a financial advisor, do your research first. Not all advisory firms are the same \u2013 only a firm that is a Registered Investment Advisor (RIA) has a fiduciary duty to act in the best interest of their clients.<\/p>\n

The material contained in this article is for general information only and should not be construed as the rendering of personalized investment, legal, accounting, or tax advice.<\/em><\/p>\n

To learn more about Thomas McFarland, view his<\/strong> Paladin Registry profile<\/span><\/a><\/strong><\/span>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Whether looking to upgrade the kitchen, find a new job, or decide which positions to buy for a 401(k), you must decide: should you do it yourself or consult a professional? While the dangers of trying to do your own electrical work are more evident, do-it-yourself (DIY) investing also carries risks for those who aren\u2019t careful. According to a recent study by Deloitte, 52% of respondents were not working with<\/p>\n","protected":false},"author":66,"featured_media":5882,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[395],"tags":[],"class_list":["post-5876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"yoast_head":"\n3 Do-It-Yourself Investing Pitfalls<\/title>\n<meta name=\"description\" content=\"Do-it-yourself (DIY) investing carries risks for those who aren\u2019t careful just like the risk of trying to do your own electrical work which is more evident,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"3 Do-It-Yourself Investing Pitfalls\" \/>\n<meta property=\"og:description\" content=\"Do-it-yourself (DIY) investing carries risks for those who aren\u2019t careful just like the risk of trying to do your own electrical work which is more evident,\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/\" \/>\n<meta property=\"og:site_name\" content=\"Paladin Registry Blog\" \/>\n<meta property=\"article:published_time\" content=\"2015-05-27T12:45:11+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2015-06-01T20:42:58+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"620\" \/>\n\t<meta property=\"og:image:height\" content=\"360\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Thomas McFarland\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@DarrowWealth\" \/>\n<meta name=\"twitter:site\" content=\"@PaladinRegistry\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Thomas McFarland\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/\",\"url\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/\",\"name\":\"3 Do-It-Yourself Investing Pitfalls\",\"isPartOf\":{\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg\",\"datePublished\":\"2015-05-27T12:45:11+00:00\",\"dateModified\":\"2015-06-01T20:42:58+00:00\",\"author\":{\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/#\/schema\/person\/67823c14cb1ebc7274e9412c58cb021d\"},\"description\":\"Do-it-yourself (DIY) investing carries risks for those who aren\u2019t careful just like the risk of trying to do your own electrical work which is more evident,\",\"breadcrumb\":{\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#primaryimage\",\"url\":\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg\",\"contentUrl\":\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg\",\"width\":620,\"height\":360},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.paladinregistry.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Investing\",\"item\":\"https:\/\/www.paladinregistry.com\/blog\/category\/investing\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"3 Do-It-Yourself Investing Pitfalls\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/#website\",\"url\":\"https:\/\/www.paladinregistry.com\/blog\/\",\"name\":\"Paladin Registry Blog\",\"description\":\"Helping You Make Better Financial Decisions\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.paladinregistry.com\/blog\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/#\/schema\/person\/67823c14cb1ebc7274e9412c58cb021d\",\"name\":\"Thomas McFarland\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.paladinregistry.com\/blog\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/tom-mcfarland-e1432135593981-96x96.jpg\",\"contentUrl\":\"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/tom-mcfarland-e1432135593981-96x96.jpg\",\"caption\":\"Thomas McFarland\"},\"description\":\"Tom McFarland is a Certified Financial Planner\u2122 practitioner and the President and Founder of Darrow Wealth Management, a fee-only financial advisor in Boston. Founded in 1987, Darrow Wealth Management offers comprehensive, holistic financial advisory services for experienced professionals with complex planning needs.\",\"sameAs\":[\"http:\/\/www.darrowwealthmanagement.com\",\"https:\/\/www.linkedin.com\/company\/darrow-wealth-management\",\"https:\/\/x.com\/DarrowWealth\"],\"url\":\"https:\/\/www.paladinregistry.com\/blog\/author\/tom-mcfarland\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"3 Do-It-Yourself Investing Pitfalls","description":"Do-it-yourself (DIY) investing carries risks for those who aren\u2019t careful just like the risk of trying to do your own electrical work which is more evident,","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/","og_locale":"en_US","og_type":"article","og_title":"3 Do-It-Yourself Investing Pitfalls","og_description":"Do-it-yourself (DIY) investing carries risks for those who aren\u2019t careful just like the risk of trying to do your own electrical work which is more evident,","og_url":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/","og_site_name":"Paladin Registry Blog","article_published_time":"2015-05-27T12:45:11+00:00","article_modified_time":"2015-06-01T20:42:58+00:00","og_image":[{"width":620,"height":360,"url":"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg","type":"image\/jpeg"}],"author":"Thomas McFarland","twitter_card":"summary_large_image","twitter_creator":"@DarrowWealth","twitter_site":"@PaladinRegistry","twitter_misc":{"Written by":"Thomas McFarland","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/","url":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/","name":"3 Do-It-Yourself Investing Pitfalls","isPartOf":{"@id":"https:\/\/www.paladinregistry.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#primaryimage"},"image":{"@id":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#primaryimage"},"thumbnailUrl":"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg","datePublished":"2015-05-27T12:45:11+00:00","dateModified":"2015-06-01T20:42:58+00:00","author":{"@id":"https:\/\/www.paladinregistry.com\/blog\/#\/schema\/person\/67823c14cb1ebc7274e9412c58cb021d"},"description":"Do-it-yourself (DIY) investing carries risks for those who aren\u2019t careful just like the risk of trying to do your own electrical work which is more evident,","breadcrumb":{"@id":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#primaryimage","url":"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg","contentUrl":"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/DIY-Investing.jpg","width":620,"height":360},{"@type":"BreadcrumbList","@id":"https:\/\/www.paladinregistry.com\/blog\/investing\/3-diy-investing-pitfalls\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.paladinregistry.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Investing","item":"https:\/\/www.paladinregistry.com\/blog\/category\/investing\/"},{"@type":"ListItem","position":3,"name":"3 Do-It-Yourself Investing Pitfalls"}]},{"@type":"WebSite","@id":"https:\/\/www.paladinregistry.com\/blog\/#website","url":"https:\/\/www.paladinregistry.com\/blog\/","name":"Paladin Registry Blog","description":"Helping You Make Better Financial Decisions","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.paladinregistry.com\/blog\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.paladinregistry.com\/blog\/#\/schema\/person\/67823c14cb1ebc7274e9412c58cb021d","name":"Thomas McFarland","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.paladinregistry.com\/blog\/#\/schema\/person\/image\/","url":"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/tom-mcfarland-e1432135593981-96x96.jpg","contentUrl":"https:\/\/www.paladinregistry.com\/blog\/wp-content\/uploads\/2015\/05\/tom-mcfarland-e1432135593981-96x96.jpg","caption":"Thomas McFarland"},"description":"Tom McFarland is a Certified Financial Planner\u2122 practitioner and the President and Founder of Darrow Wealth Management, a fee-only financial advisor in Boston. Founded in 1987, Darrow Wealth Management offers comprehensive, holistic financial advisory services for experienced professionals with complex planning needs.","sameAs":["http:\/\/www.darrowwealthmanagement.com","https:\/\/www.linkedin.com\/company\/darrow-wealth-management","https:\/\/x.com\/DarrowWealth"],"url":"https:\/\/www.paladinregistry.com\/blog\/author\/tom-mcfarland\/"}]}},"_links":{"self":[{"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/posts\/5876"}],"collection":[{"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/comments?post=5876"}],"version-history":[{"count":8,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/posts\/5876\/revisions"}],"predecessor-version":[{"id":5958,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/posts\/5876\/revisions\/5958"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/media\/5882"}],"wp:attachment":[{"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/media?parent=5876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/categories?post=5876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paladinregistry.com\/blog\/wp-json\/wp\/v2\/tags?post=5876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}