Online investing is a relatively new phenomenon. Back in the 1980s, you had to pick up a figurative red telephone and call your broker who charged you a small ransom to buy or sell a stock. By the mid 1990s, mutual funds had become the investment vehicle of choice for the masses, which could be bought at your local bank or investment advisor shop. Fast forward to the year 2000 and we hit the Dot-com Bubble, which subsequently gave rise to the online discount brokerage. More recently, everyday investors are eschewing mutual funds and their expensive MERs in favour of lower-fee Exchange Traded Funds (ETFs). This explosion of interest in ETFs has supercharged a new trend of Do-it-Yourself (DIY) investing through online brokerages.
The writing’s “in the call”
We have seen this DIY trend-in-the-making first-hand. Every week we work with the Business News Network (BNN) to produce Berman’s Call – a call-in show dedicated to investor education and empowerment. Also, twice a year we take our team on the road to put on a series of educational conferences in many major cities in Canada. Through both Berman’s Call and our conferences we’ve met investors from all walks of life, and we can honestly say there is a growing movement of Canadians driven to take charge of their own investments. Moreover, as some of our friends who run discount brokerages estimate, there are around 8-9 million discount brokerage accounts in Canada. Some DIY investors are active (a.k.a. swing) traders trying to beat the market, whereas others have a longer-term vision and bide their time, aspiring to be the next Warren Buffett. Many end up throwing in the towel and decide it’s not for them, while others can’t get enough action. So the big question is, if you haven’t already, should you join them?
Should you join the DIY Movement?
It turns out that’s a difficult question to answer, because it depends on who you are as a person, and what kind of lifestyle you want to live. All we can do is give you the information you need to make the decision for yourself. We can share both DIY investor success stories and horror stories. In the end, you’ll have to decide for yourself what’s right for you. Since this is such an important subject, we’ve created a three-part series of articles to help you explore the subject in detail. There are, in fact, four choices for you to consider:
1) Do all of your own investing.
2) Invest with the help of a financial advisor.
3) Do some investing on your own and have an advisor manage the rest.
4) Put your money under your mattress.
If you chose option 4, you either need a massive amount of money to start with, or a reliable source of retirement income, like a pension plan or a successful business. For the rest of you - if you don’t want to end up relying on a government stipend in your golden years - you’ll eventually need to choose one of the first three options.
Coming up next week we will delve into the pros and cons of doing your own investing.
About Larry Berman
Larry Berman is best known to Canadians as the host of the top-rated TV show Berman’s Call on the Business News Network (BNN). After leading an impressive career with some of Canada’s largest financial institutions, Larry had seen enough of the dark side of the financial industry to know that Canadian investors had the deck stacked against them - saddled with the highest fees and lowest levels of financial literacy in the developed world, they needed help. This is why, in 2006, Larry left the corporate world behind to pursue his passion for helping people do better with their money.
Larry is now the co-founder of the Independent Investor Institute – which is dedicated to empowering self-directed investors through hands-on education, and ETF Capital Management, a boutique portfolio management firm for affluent investors who are looking for a highly customized and hands-off approach to investing. Larry also hosts free speaking tours across Canada throughout the year, and free beginner trading workshops through the Independent Investor Institute.