DIY investing: Be wary of its touted benefits and hidden costs
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DIY investing: Be wary of its touted benefits and hidden costs

25 Apr
25 Apr

The do-it-yourself or DIY trend is not new — social media and the internet have simply accelerated its growth. Be it newly-weds putting together a job from IKEA or Taobao to furnish their new flat, or an investor constructing his own investment portfolio, people are embracing self-help and the sense of satisfaction that comes with it.

The proliferation of low-cost online brokerages and overwhelming access to information 24/7 has also encouraged more people to want to manage their own investments by themselves.

To many, taking investing into your own hands seems the natural choice — as we have all surely heard of stories from friends and family with seemingly impeccable foresight to have bought Tesla or Bitcoin in the early days. But in some cases, investors could quickly realise the stress, time required and other downsides to DIY investing, that it may not be as simple, straightforward, and satisfying as assembling a bookshelf or the seemingly easy stock picking stories you have heard. 

What is "do it yourself" investing?

DIY investing is an investing method in which an individual decides to construct and manage their own investment portfolio — instead of engaging an agent, such as a financial advisor to do so.

Some DIY investors choose to directly invest in individual securities, while others invest in unit trusts and exchange-traded funds (ETFs) to get broader investment exposure for a small management fee.

Pros of DIY investing

1. Costs are presumably lower

DIY investing in Hong Kong can be cheaper than other methods, provided that you know how to:

  1. Source for the right investment products, and
  2. Have the products cheaply "delivered" to you.

This is similar to how newlyweds scour Taobao to buy furniture: you go straight to the source, get the cheapest product, and find the cheapest delivery method. If you do not need the input of an interior designer and can take things into your own hands, you have the lowest-cost product.

For DIY investing, you can research online and buy the cheapest investment products, directly from the fund managers where possible. You may look for the most cost-efficient brokerage or unit-trust platform, and invest through it.

That way, you avoid expensive sales charges, as you pay only one-off brokerage charges. You also avoid buying the expensive retail share class of unit trusts that have built-in middleman costs, or trailer fees.

2. You have full control of the investments that you make

Without anyone advising you on your portfolio allocation decision, you have the full discretion on how you want to invest.

That means you are free to invest:

  1. Based on your personal values, such as impact investing or shariah-compliant investing;
  2. To aim for the highest returns, through frontier technology or making tactical asset allocations;
  3. To minimise risk by adopting investment styles such as all-weather or permanent portfolios;
  4. To receive passive income through dividend investing or passive investing;
  5. In a passive, diversified manner, like Boglehead investing into index funds.

Your investment decisions could be a combination of the above, or based on more speculative bets.

When you create your own portfolio, you know exactly what goes into it. The process of portfolio construction forces you to consider a variety of different options.

This deliberation and down-selection process helps build conviction in remaining invested, as opposed to engaging a financial advisor that you may not fully trust.

Learn how to build the classic 60/40 portfolio, which often hits the sweet spot in balancing diversification, growth, and risk mitigation for long-term investors. To use both the strategic and tactical methods of asset allocation in your portfolio, consider the core-satellite strategy.

Cons of DIY Investing

1. Time and resources spent to manage your investments

The freedom of DIY investing comes with great responsibility. There are no errant financial advisors (or unreliable housing contractors, in the case of renovating your home) for you to blame when things go wrong.

From the weight of your financial planning decisions to the execution of your investment plans, all the responsibility lies squarely on your shoulders.

You can go to the bookstore to buy a book that covers the basics of DIY investing, Google for specific answers to your questions or maybe even try asking ChatGPT. But you cannot be certain that these resources did not miss anything — such as the most updated information (definitely in the case of ChatGPT) or any conflict of interest — in their recommendations.

For many people, investing is actually a full-time job on its own, instead of a hobby or "side hustle". DIY investors need to devote substantial time and resources, which can sometimes be overwhelming if you already have a day job and other commitments.

The financial world centres around a dynamic marketplace. New ETFs, unit trusts and investment platforms are launched at an accelerating pace, often with lower costs and better product features. It is difficult to keep up-to-date with the latest developments by yourself if you want to get the best products.

The management of it can be difficult for some people — you have to set up a brokerage account, understand the industry jargon when you use and operate the platforms, and manually key in trades on a monthly basis.

DIY investing is nothing like directing the renovation of your new home — there is neither a clear outcome nor a timeline. The time and effort spent managing your investments can be tremendous, depending on how detailed-oriented you want to be.

2. Letting your emotions take hold

When we manage our own investments, it is easy to let our impulses and fears take control.

For example, we may get excited with hot news from Reddit or social media and choose to punt a hot stock. Or we may speculate beyond our own financial and emotional comfort level and make decisions that we will regret.

We may also make mistakes that affect our confidence and discipline in investing consistently in the future.

Read more: Rational investment strategies to win in a tumultuous market

3. Rebalancing your portfolio exposure

While you can invest into a portfolio of stocks and funds through a brokerage, maintaining the portfolio based on your preferred allocation is difficult.

The stock market is volatile and share prices can fluctuate wildly, throwing your portfolio allocation percentages off.

Managing your investments requires you to constantly monitor the allocation, and to make the necessary buy/sell trades at the right amount and time to maintain your portfolio. This can be a time-consuming and expensive process.

How it differs from investing with an advisor 

For those who have not used financial advisors or platforms such as Endowus, one might wonder how it is different from DIY investing. 

As your advisor, our Endowus Investment Office has already done most of the hard work for you in screening and doing due diligence to curate the Best-in-Class for you to choose from. That saves you time and effort to do your own DIY research, as in Hong Kong alone there are more than 2,000 SFC-authorised retail funds and more than 2,500 stocks listed on the Hong Kong Stock Exchange.

Based on your investment objective, investment horizon, and risk profile, we will recommend the most optimal investment products and portfolios for you to consider.  You can also choose to own multiple portfolios based on your different objectives and utilise the core-satellite investment approach, leveraging our Endowus Global Diversified Core Portfolios and Satellite Portfolios.

We will constantly monitor your portfolios and they will be auto-rebalanced, if due to market fluctuations, the portfolios deviated from your target asset allocation. That saves you time to continuously have to monitor your investments. 

Finally, for your peace of mind, you can also speak with our SFC-licensed financial advisors at any time if you have any questions.

Endowus is the first non-commissioned based independent digital wealth advisor in Hong Kong, our mission is to help our clients invest better, so they live easier today and better tomorrow.

Click here to get started with Endowus.

Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. 


Whilst Endowus HK Limited (“Endowus”) has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies or typographical errors.

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endowus and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances.

No invitation or solicitation

Neither the information, nor any opinion, contained in this article constitutes a promotion, recommendation, solicitation, invitation or offer by Endowus or its affiliates to buy or sell any securities, collective investment schemes or other financial instruments or services, nor shall any such security, collective investment scheme, or other financial instruments or services be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction. This is not intended to be an invitation or offer made to the public to subscribe for any financial product or other transaction.

This advertisement has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong

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