Is It Still Worth Investing In Stocks On Your Own In 2018?

We’ve been going through some wicked phases here in the last few years in terms of investments. Back in 2011, at the young age of 21 years old, I decided to leave my bank and my very popular at the time mutual funds to enter the world of DIY investing.

I thought I was already an expert and would face some pretty heavy losses early in my day. But that is a story for another time.

As we approach the midway point in 2018, I often mull over what options investors have. I have to say, I’m impressed. Back in 2011 I had barely heard of an index fund, Robo-advisor or ETF.

Now, this was probably because I was very poorly educated when I decided to step into the markets myself. But, another possibility is these investing methods were slowly but steadily becoming the go to resource for most investors and would soon break out in a huge way.

So, I often find myself asking the question

“Is it really worth investing in stocks on your own these days?”

I’ll provide a few valid points for each side of the argument, and you can guess which one I am on.

Robo-advisors promise less fees with equal returns

If you’re attempting to find the best way to invest money in 2018, you’re going to find Robo-advisors in 9 out of every 10 articles.

The facts are simple. These guys cut costs huge when compared to mutual funds, and they actually have surprisingly good returns.

How can they do such a thing?

Well, first off, your portfolio is going to be made up solely of passive ETFs. What this essentially means is the ETFs are purchased and almost never managed by the fund manager. Unlike a mutual fund, which is balanced and buffed all the time.

This saves money numerous ways. First off, no commissions. If you aren’t actively trading stocks inside of the ETF, you don’t have commission costs.

Secondly, you don’t need an extensive team to manage the fund all the time, so it saves on manpower. Time is money, and these investment managers are getting paid while they are working.

Robo-advisors literally do all the work for you for less than a quarter of the management fee in most cases. It really makes an investor who is spending countless hours on investment research sit back and think “is this all worth it?”

The downfalls of Robo-advisors

Like I said, I’m going to be discussing both ends of the spectrum here. I’m an avid stock picker. I love individual analysis and I love finding those diamonds in the rough. I can’t do that myself with Robo-advisors, and neither can your Robo-advisor.

I invest in a portfolio full of stable blue-chip dividend stocks and speculative(some more than others) growth stocks. At the age of 28, I believe I am in a position to take some risks when it comes to managing my portfolio. Those risks are the growth stocks.

In the last 7 months, I have purchased two stocks in particular that have netted me a 300% ROI. Now, if you’ve been investing for any amount of time you probably know the average return of the stock market is 7%. Sounds pretty good doesn’t it?

You’re not going to get this with your Robo-advisor. Sure, you may have one of the stocks from my portfolio inside an ETF that your advisor has purchased for you. But, it may only be 5 percent of that ETFs total holdings. So, 1/20th of the ETF has doubled.

It’s very hard to beat the market on a consistent basis when investing with a Robo-advisor.

I mean, it’s very hard to beat the market at any sort of level, but at least you have a chance to do it when you’re individually picking stocks.

Most individual investors fail to achieve market returns

There is a lot that goes into making the decision to buy, sell, or hold a stock. In order to successfully beat the market, you need to be making the correct decision the large majority of the time.

One incorrect sell hold or buy can be absolutely devastating to a portfolio. This is why it is so hard for individual investors to succeed.

What leads to those incorrect decisions? Well, it’s pretty simple. A lack of knowledge in investing and a lack of mental toughness. Admitting you lack either of these when making your own investments is nothing to be ashamed of. Why?

Because the large majority of people don’t have either. A lot of people jump into the market without the correct knowledge. Instead of opening that practice account, they jump right into the real thing and often make mistakes that could take years to recover from.

And even if the investor has prepared themselves learning the markets, there is always the mental aspect. Which, by the way, is more often than not harder to master than the skill.

It is mentally rewarding watching your money grow. The feeling of picking an excellent stock is one of the best there is. However, the feeling of watching a stock you were certain was headed to the top plummet down is one of the most difficult things you can experience.

You essentially feel like your money is on fire. It’s disappearing 10 times as fast as you earned it. That sell button is only one click away and you can end all this madness and finally sleep well at night. You sell, go to bed, wake up the next morning, and subsequently watch the stock go on a bull run and double by years end.

Turns out your pick was heading to the top. You just didn’t have the mental patience to withstand the right hooks along the way. This is one of the number one reasons why investors fail, and one of the main reasons you should head to an advisor if you don’t think you can handle it.

You’ll never really know unless you try

The fact that you’re even thinking of attempting it, or are currently trying DIY investing out is awesome. Because you know what? You will never truly know if you can handle the ups and downs until you actually attempt it.

This is slightly off topic, but it will hit a point home that I want to make. I became a professional poker player back in early 2015 and continued to play until I simply lost enjoyment of the game in the start of 2017.

The amount of people I had speaking in my ear about how I was going to fail was astonishing. And you know what, statistically they were right. 90% of players who attempt to play poker full time are going to go broke. And I would bet out of that remaining 10 percent, half of them will break even.

But, I toughed it out and I studied the crap out of the game, I learned the intricacies and I ended up with a 6 figure resume of tournament and cash game winnings.

But, I didn’t just one day decide to quit my job and play a card game for a living. I had been a poker player for years prior to that. It takes time, and it takes dedication.

The exact same can be said about investing. You’ll have a ton of naysayers who simply head to their bank, cash their checks and give them a third of their retirement portfolio in fees over their working careers.

They will tell you you will fail, they will tell you that you should stick with your bank. Succeed on your own however, and you could be drinking beers on a beach while they still have 5 years left to go in their working careers.


About Dan Kent
Dan Kent is a writer and co founder of A DIY investor for 8 years now, Dan has a combination of dividend, growth and real estate investments in to his portfolio and is looking to continually grow his net worth. You can check his website out at or follow him on Twitter at @Stocktrades_CA.


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