Self-Investors – A New Breed Of Money People?

Written by on July 15, 2013 in Money - No comments | Print this page


google-financeWhy people start DIY investing

There are as many different investor types as there are investors.

It’s very much a pursuit that is based entirely on the requirements and the personality of the individual – so it follows that everyone is different to some degree.

One area that people differ is in their level of being risk-averse.

If you’re investing towards a long-term objective you will have your own natural feelings regarding risk.

Obviously all investments have risk attached – that’s the nature of the game – but there are ways of helping to lessen risk – such as making sure your investment portfolio is diverse – and not over-reliant on one particular class or sector.

It goes without saying, of course, that self-investors are people who feel confident in making their own decisions, since if you’re using a service that’s unadvised then your decisions are all self-made.

While there are plenty of investing sites and blogs out there, they are for informational purposes only, and can’t ever be substituted for financial advice. So as all the best blogs will mention, if you require advice about investing then that advice needs to be sought from a qualified and independent financial advisor.

Sites like exist to help people find information on IFAs within the UK.

What people invest in

The stocks and shares ISA is a way for people to invest while also having the investment gains protected from tax.

You can put stocks and shares in any combination you desire into an ISA wrapper, but in general many smaller investors usually hold their ISA investment in collective vehicles  such as OEICS and Unit Trusts of which there is a wide choice.

There are active managed funds and passive (tracker) funds types which operate in different ways.

Recently the UK government announced that alternative investment market (AIM) stocks and shares would be eligible for ISA investments.

This gives people more choice in terms of where to invest but AIM stocks have historically been subject to more volatility than large cap, or blue chip companies.

Outside of ISA investing there are any number of things that people can and do invest in that are classed as alternative investments. These can include stuff like art, fine wines and collectables like coins and stamps.

Investment aims and objectives

Saving or investing without a goal was recently described as like “going on a journey without knowing the destination”. So in order to get the most from saving and investing it’s a good idea to sit down and consider what your requirements are. For instance if you’re looking to add X amount to your pension pot, then the factors to consider are

  • How long until you retire
  • The amount per year you would need to put away in order to achieve the sun you’re aiming for

Which type of investment suits you best. For instance an instant access cash ISA might mean you’d have the cash straight away when you require it, but if you don’t need instant access, then you might want to consider a longer term investment which may also provide the potential for better returns.

Obviously as with all investments risk is involved, so it’s also important to know what level of risk you feel you can afford. For instance, tracker funds have low charges as they aren’t actively managed, which also means that since they track an index, they’re less likely to deviate too much from the market performance.

This type of fund is often seen as lower risk but also with lower potential for return as compared to managed funds.

C Foley writes on finance and investing, and you can follow him on Twitter here.


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