Regency Wealth Management

Time to Give Up Do-It-Yourself Investing?

When most of us need our cars repaired, we go to a certified mechanic. When we need a medical opinion, we see a doctor. But when we plan our financial future, many of us balk at the idea of hiring an expert.

Some people are happier simply holding cash. They view stocks — and perhaps even bonds — as complicated and risky. Others invest their money themselves as a part time hobby. Some conduct sophisticated research, but others chase the latest hot tip or investing fad, largely ignoring their losses, while they hope to make it up “next time.”

For these do-it-yourself investors, the risks aren’t entirely clear, but they are numerous. They range from the danger of emotional decision making, to a lack of time for important research, to misunderstanding complex investment language. If asked about their goals, many do-it-yourselfers cite a vague desire to “beat the market.” When the investments pay off, do-it-yourself investors will often discuss the victory with colleagues or friends at cocktail parties, but they rarely mention their losses.

The past eight years of an escalating US stock market have provided a window of reward for some do-it-yourself investors who have loaded up their accounts with a handful of household name stocks. In some cases, they have been lucky, but their luck at some point may run out.

Two factors should cause the do-it yourself investor to consider changing course now, before it is too late. The current bull market has been steaming ahead for eight years. The chances of sustained growth for much longer are hard to predict. At record high markets, we are that much closer to an eventual “correction” (when markets drop 10% or more). Additionally, for those near or in retirement, the window of opportunity to recoup losses shortens as a person’s retirement draws near. Do-it-yourself investors who have an investing set back after age sixty don’t have as much time for the market to recover before the loss affects their lifestyle. Time may heal all wounds, but all investors don’t have sufficient time.

Returns on a diversified 80 percent stock and 20 percent bond portfolio are estimated to have a 95% probability of varying between an 18 percent loss and a 27 percent gain during any six-month period, according to Riskalyze, a software program that uses mathematical algorithms and combines them with market data to calculate probable investment outcomes given the historical risk profile of the underlying investment securities. Trying to time the sale of investments to beat a possible market correction is dangerous. It can lead to missed opportunities like selling too early. Once you sell an investment, there is no guarantee that a reinvestment can be made at just the right moment to benefit from a sharp and quick recovery. Additionally, all the time and energy devoted to market watching and investing can detract from regular employment or enjoyment.

Registered investment advisors, like Regency Wealth Management (Regency), are fiduciaries and required to act in the best interest of their clients. Because our fees are based on a percentage of the assets under management, Regency’s interests are aligned with those of our clients, minimizing conflicts of interests.

Using our years of experience, we buy and sell investments for our clients’ accounts with the intention of maximizing their returns while incorporating their risk tolerance and financial goals. Watching the market for our clients is our full time job; not a part-time hobby. The resulting portfolios are often more diversified than ones constructed by individuals who manage their own money.

If do-it-yourself investors are honest, they know that part time investing is risky.

The decision to give up direct control of your investments to a financial planner with discretionary power over your assets can seem scary, however it can provide great peace of mind. Pursuing a successful financial plan — one that balances risk with the need to provide resources for a client’s entire life span and legacy — is a responsibility that Regency takes very seriously.

After years of the do-it-yourself approach, are you ready to call an expert? At Regency Wealth Management, all advisors hold industry recognized professional designations. Two have been awarded the Charter Financial Analyst designation and two are Certified Financial Planner ™ professionals. We are ready to put our team’s collective experience and expertise to work and develop a customized strategy for you.

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