Managing investments yourself can offer flexibility and control, but it does take some discipline and a solid financial plan.
The DIY Investing Hub notes that many investors underperform not because of the market, but because of poor decisions and a lack of strategy.
This article provides five straightforward tips for DIY investors seeking to grow their wealth, stay on track and avoid common pitfalls.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
1. Establish clear financial goals and risk tolerance
Before building your portfolio, it's crucial to determine your financial goals and assess the level of risk you can handle. Are you saving for an emergency, a house or retirement? Break down your goals into short-term, medium-term and long-term objectives.
Try using SMART goals by making them specific, measurable, achievable, relevant and time-bound. Once you've got those set, think about your risk tolerance.
Know how much the market ups and downs make you sweat — this will help you decide where to put your money.
As a general construct, the longer your investment timeline, the greater your ability to withstand periodic bouts of market volatility.
2. Craft a diversified investment portfolio
A well-diversified portfolio is designed to be one of the best defenses against market volatility. Avoid concentrating your investments in a single area. Spread them across stocks and bonds, and even consider alternatives, such as real estate or commodities.
One way to diversify is through asset classes. For example, within stocks, consider diversifying across market capitalization (large-cap, mid-cap, small-cap) and investment styles (growth, value).
It's also essential to remember geographic diversification and to include international stocks and bonds. While diversification doesn't guarantee you'll make money, it can help you ride out the ups and downs.
3. Embrace a long-term investment mindset
One of the most common mistakes DIY investors make is trying to time the market. Instead of jumping in and out of investments based on market volatility, consider a long-term approach.
I suggest implementing a buy-and-hold strategy; holding on to your investments can lead to better long-term growth and saves on transaction fees.
If you're investing regularly, consider dollar-cost averaging. This strategy involves investing a fixed amount every month in the market, allowing investors to buy more shares when the price dips.
4. Manage costs and taxes effectively
High fees can eat into long-term returns. If you opt for low-cost investment options, such as index funds and ETFs, you can help minimize these expenses and potentially increase your long-term returns.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
Investing options, such as a Traditional or Roth IRA or Traditional or Roth 401(k), are considered tax-advantaged and can help you maximize your investment growth while minimizing your tax liability.
In fact, according to Vanguard, these accounts allow you to either defer or avoid certain taxes, which can make a big difference over time.
If you're investing in taxable accounts, you can sell some investments at a loss to offset gains, which can help lower your tax bill.
5. Regularly review and adjust your strategy
Review your portfolio at least once a year to ensure it remains up to date. Check if your goals or risk tolerance have changed. If your asset allocation looks off, you may need to rebalance your portfolio.
Stay updated and be ready to tweak your plan as your situation or the market shifts.
DIY investing isn't about making perfect moves — it's about having a clear plan, staying disciplined and making thoughtful adjustments as you go.
By following these guidelines, DIY investors will be equipped with the knowledge and tools to navigate the wealth management landscape with confidence.
While these tips can help you build a strong foundation, managing your own investments doesn't mean you have to go at it alone.
Working with a CERTIFIED FINANCIAL PLANNER™ professional is a great way to be able to consult with a trained practitioner in each of the above areas and receive personalized, professional guidance.
Related Content
- 5 Great Tools for DIY Stock Investors
- Are You a DIY Retirement Planner? Four Things You Need to Know
- Diversification: An Investment Adviser's Guide to Why You Need It and How to Achieve It
- The Best ETFs to Buy Now
- 10 Common Investing Mistakes That Can Easily Be Avoided
-
Neglecting Car Maintenance Could Cost You More Than a Repair, Especially in the SummerWorn, underinflated tires and other degraded car parts can fail in extreme heat, causing accidents. If your employer is ignoring needed repairs on company cars, there's something employees can do.
-
'Drivers License': A Wealth Strategist Helps Gen Z Hit the RoadFrom student loan debt to a changing job market, this generation has some potholes to navigate. But with those challenges come opportunities.
-
Neglecting Car Maintenance Could Cost You More Than a Repair, Especially in the Summer
Worn, underinflated tires and other degraded car parts can fail in extreme heat, causing accidents. If your employer is ignoring needed repairs on company cars, there's something employees can do.
-
'Drivers License': A Wealth Strategist Helps Gen Z Hit the Road
From student loan debt to a changing job market, this generation has some potholes to navigate. But with those challenges come opportunities.
-
Stock Market Today: Markets Chop Up More Trump ThreatsStocks are grinding to new highs on light summer volume, and bitcoin is only getting bigger.
-
If You'd Put $1,000 Into Procter & Gamble Stock 20 Years Ago, Here's What You'd Have TodayProcter & Gamble stock is a dependable dividend grower, but a disappointing long-term holding.
-
2026 Social Security COLA: The Little Known Data Shift That Could Impact Millions of Retirees' BenefitsThe BLS has changed how it measures the inflationary data that determines whether Social Security benefits will get a Cost-of-Living Adjustment (COLA). Will it hurt your benefits?
-
Financial Pros Provide a Beginner's Guide to Building Wealth in 10 YearsBuilding wealth over 10 years requires understanding your current financial situation, budgeting effectively, eliminating high-interest debt and increasing both your income and financial literacy.
-
The Delightful Way to Protect Your Cognitive HealthYou know the drill — protect your cognitive health by eating well, exercising and socializing. But this newfound way to boost brain health is pure pleasure.
-
Five Mistakes to Avoid in Your First Year of RetirementRetirement brings the freedom to choose how to spend your money and time. But choices made in the initial rush of excitement could create problems in future.
