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

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

June 20, 2022
September 4, 2020
People fixing a wall

The Do-It-Yourself trend is not new; social media and the internet have just accelerated its growth. Be it Ikea Billy bookshelves, furnishing and decoration of newly-weds BTO, or investment portfolios, people are embracing self-help and the sense of satisfaction that comes with it.

With the proliferation of low-cost brokerages and unbridled access to information, there is a greater push for people to self-manage their investments. For the uninitiated, there may be benefits to taking investing into your own hands, but many will realise that the stress and satisfaction involved is not quite the same as assembling a bookshelf.

What is "Do-It-Yourself" investing?

DIY investing is an investing method in which one decides to construct and manage his or her own investment portfolio, rather than engaging an agent, such as a remisier, financial advisor, or relationship manager to manage his portfolio.

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

Pros of DIY investing

1. Costs are presumably lower

DIY investing for Singaporeans can be cheaper, if 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 newly-weds 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 get the cheapest products, directly from the fund managers (such as Vanguard) where possible. Then you can find the most cost-efficient brokerage/unit trust platform and you invest through it.

That way, you avoid expensive sales charges by paying one-off brokerage charges. You also avoid buying expensive retail share class unit trusts that have built-in middleman costs (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. 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 get 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 what goes into it. The process of portfolio construction forces you to consider between different options before you choose your final investment portfolio.

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

Cons of DIY Investing

1. Time and resources spent on managing your investments

The freedom of DIY investing comes with great responsibility: there are no errant financial advisors (or contractors for housing) for you to blame. From the weight of your financial planning decisions to the execution of your investment plans, all the responsibility lies on your shoulders.

image of woman fixing a chair

You can buy an e-book that covers the basics of DIY investing in Singapore, or Google for specific answers to your questions. But you cannot be certain that your sources do not miss anything in their recommendations, or the most updated information. For many people, investing is a full time job on its own.

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

The management of it is difficult for some people - you have to set up a brokerage account, understand the industry jargon when you use and operate the platform, 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 efforts spent managing your investments can be tremendous depending on how detailed oriented you want to be.

Read more: The importance of rebalancing your portfolio (Endowus Insights)

2. Few Singapore-suitable DIY investment products

While you can import furnishing and appliances for your DIY home solution, there is a lack of appropriate DIY products for Singaporeans.

people looking at furniture

In the first place, an ideal DIY passive portfolio would be one where you:

  1. are investing at a risk-appropriate level,
  2. are meaningfully diversified across asset classes, geographies, and sectors,
  3. have minimised cost at all levels by being tax- and FX-efficient, and
  4. find it easy to manage on a day-to-day basis.

For Singaporean investors, while there is little contention on how to invest in an appropriate DIY equity portfolio (such as LSE-listed ETFs), the choices for bonds and alternative investments become less obvious.

Should we buy USD bond ETFs or SGX-listed bond ETFs like A35/MBH, or should we copy Jack Bogle's traditional 3-fund portfolio as Singaporeans?

Read more: Managing and thinking about currency exposure for your portfolio (Endowus Insights)

Unfortunately, there are few bonds and alternative investment solutions for retail investors. SGD hedged bond unit trusts are expensive due to high fund management fees. Bond ETFs on the SGX are not meaningfully diversified. Being a Singaporean DIY investor means that you have to make compromises in your investment choices.

3. Letting your emotions take hold

When we self manage our investments, it is easy to let our impulses, fears take control. We may get excited with hot news from Reddit and choose to punt a hot stock. 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.

4. 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 % off.

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

DIY investing versus investing with digital wealth platforms or robo-advisors

While some people may think that using a wealth platform/robo-advisor such as Endowus is a form of DIY investing, it definitely is not. You are given an investment solution based on your risk profile and goals, with curated and selected funds built into an optimal portfolio suitable for you as a Singapore-based investor in terms of cost, tax and currency exposure.

The level of customisation involved is low and your portfolio is constantly monitored, and you have an MAS-licensed financial advisor to speak with whenever you want.

A DIY solution would mean that you have some form of autonomy in terms of the investment exposure that you have. That way, for example, if you work in a US tech company you may want to hold less investments into the US markets.

Perhaps a solution where users can adjust their investment portfolios based on down-selected funds, with a platform automating the investing and monitoring is the perfect solution.


Investment involves risk. 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. Past performance is not an indicator nor a guarantee of future performance. Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund. 

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 Pte. Ltd (“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 Pte. Ltd., 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. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

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