DIY 'Til I Die; You Can DIY Your Investments If You Have The DIY Ethic

From Wikipedia, “DIY ethic is the ethic of self-sufficiency through completing tasks without the aid of a paid expert. The "do it yourself" (DIY) ethic promotes the idea that anyone is capable of performing a variety of tasks rather than relying on paid specialists.

The DIY ethic requires that the adherent seeks out the knowledge required to complete a given task. This ethic emerges in correspondence to the punk subculture, the DIY ethic is tied to punk ideology and anticonsumerism. Central to the ethic is the empowerment of individuals and communities, encouraging the employment of alternative approaches when faced with bureaucratic or societal obstacles to achieving their objectives.”

Whoa. This is so you. Our clients are intelligent, savvy, curious, confident, humble and a little bit punk. Our business is subversive. We exist as a reaction to the status quo: a financial services patriarchy charging high fees for overly complex solutions. We teach our clients to manage their own money, simply and effectively, so more of it stays in their pocket. This is dangerous and threatening to the establishment.

Can you do it? Can you manage your own money? The financial advice industry thinks you can’t. Maybe they have a point. A 2008-2012 study of Vanguard clients in self-directed IRAs showed that investors who made at least one fund exchange during that period unperformed the applicable Vanguard target date fund by 150 basis points (1.5%). DALBAR’s Quantitative Analysis of Investor Behavior (QAIB) study asserts that poor market timing caused a loss of 9.42% in 2018 for the average investor compared to a decline of 4.38% in the S&P 500 index.

The studies suggest you are your own worst enemy and the financial advice industry uses these studies to convince you that you need a broker, an insurance agent or an investment advisor to keep you from doing stupid things. The industry wants you to sit back and let a trained professional take care of it, because it’s far too complicated for the average investor.

Bollocks. Investing doesn’t have to be complicated and it doesn’t have to be scary. The answer to investors’ behavioral biases isn’t advisors with high fees and conflicts of interest. No. The answer is education. The answer is setting up an investment plan that is simple, transparent and completely understandable. If you comprehend and appreciate the strategy, you can stick with it.

Sticking with a plan can be a challenge, especially in periods of extreme market turmoil. As the stock market nosedived in late 2008 and early in 2009, it took some fortitude to do nothing. The key to successful investing is calculated laziness. Set it and forget it. If you ever feel the urge to sell in panic or buy in euphoria, shoot us an email and we’ll talk you off the metaphorical cliff.

We think investing, if done right, is easy. We think financial planning, on the other hand, is relatively hard. Spend money in ways that bring you happiness, provide peace of mind or express your values. Pay yourself first by saving 10%-40% into tax-efficient retirement accounts. Pay down debt. Set aside 3-6 months of living expenses in an emergency fund. Accrue additional cash for future expenses like home repairs and college tuition. Address risk with appropriate insurance. Take care of basic estate planning. Do all that and you will achieve your financial goals.

If you have the DIY ethic, you can DIY your investments. If you have an interest in self-sufficiency and a willingness to seek out the knowledge, you can absolutely do it yourself. You never have to do it alone, though. If you need help setting up a simple investment strategy and/or puzzling through financial planning questions, don’t hesitate to contact us.

Tim Quillin