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DIY Investing vs Managed Portfolios: Which Is Right for You?

Whether you fancy yourself as the next Warren Buffett or need a helping hand getting started, explore what style of portfolio management might work best for you.
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Whether it's painting a room, changing a tyre, or fixing a leak, you'll often have two options to get something sorted: do it yourself — or pay someone else to do it for you.

Get it right, and the DIY option can be both satisfying and money-saving.

Get it wrong, however, and you might be left saying: "I wish I'd just left it to the experts!"

In many ways, the same principle applies to investing.

The problem being, with so many portfolio management options available, you’ll probably end up having lots of questions.

Thankfully, there are no right or wrong answers, only what’s right for you; and, whether you value convenience, control, or cost, this article could help you decide if that’s DIY investing — or managed investments.

Let’s start by taking a look at the definitions of both.

Jump to a section:

What is DIY investing?

DIY investing is where you create your own investment plan and make your own trades. If successful, this route may prove fulfilling and help you save on fees.

However, there is a lot of hard work involved.

Here are just a few of the things you might need to do on a regular basis:

  • Research and pick the right stocks.
  • Stay up to date with the stock market.
  • Figure out the best time to buy and sell.
  • Ensure your investments are diversified and balanced.

For some people, this is a challenge they love (and have the time) to get their teeth into. For others, lacking the skills and experience of a professional investment manager just makes DIY investing too daunting.

At Wealthify, we don’t offer any DIY investing options; instead, we provide a diverse range of managed investments for customers.

If you’re considering the DIY route, check out our blog on the 5 golden rules of investing to help you get started.

What is a managed portfolio?

As the name suggests, this option involves leaving the management of portfolios to investment experts.

Based on your financial needs and attitude to risk, these experts build an investment portfolio for you; at Wealthify, we call this your Investment Plan.

Made up of various investments, your portfolio will contain a mixture of assets, including:

  • Shares.
  • Bonds.
  • Property.
  • Commodities (precious metals, energy, agriculture etc.).

What’s more, they’ll also make sure your investments are spread across a number of industries and regions, including the USA, Europe, and Asia. This process of spreading your investments – and therefore investment risk – is known as diversification.

Ongoing portfolio management also involves having global events and financial market performance monitored on your behalf.

As a result, your investments will be automatically tweaked and optimised when needed, to keep your financial goals on track. Again, this is something that’s unique to managed investments; with DIY investing, monitoring and optimisation is down to you.

Because Wealthify doesn’t provide financial advice, however, speak to a financial advisor if you’re unsure about any of the above.

Key differences between DIY and managed portfolios

Even though you might already have a clearer picture of the portfolio management style best suited to your needs, exploring the key differences in more depth could provide further clarity.

Time Commitment

If time is money, managed investments like Wealthify’s help you make the most of both.

Apart from depositing or checking in on performance, you really don’t need to commit much time to this style of portfolio management. And, thanks to magic of Direct Debits, even the depositing part can be put on autopilot!

DIY investing, on the other hand, can take up a lot of your time, effort, and resources.

Control vs Convenience

If you are happy to put in that time and effort, then DIY investing could be the play.

Whether you’re looking to invest or allocate more of your money into specific assets, regions, or industries, creating your own DIY investment portfolio puts you firmly in the driving seat. What’s more, you can tweak and change your investments when it suits you — not someone else.

On the other side of that same coin, however, some people will always value convenience over control.

And, if you’re an investing newbie or just like leaving things to the experts, managed investments might be the way forward. Because, from initial investment selection to ongoing portfolio management, all the heavy lifting is done without you even lifting a finger.

Costs and Fees

Seeing as investing is a long-term endeavour, understanding how costs and fees can affect your strategy is crucial.

Sure, paying 0.01% extra in fees every year might not seem like a lot.

But over the course of a few decades? It soon adds up — and, more importantly, eats into your potential profit.

Because you’re not paying for the expertise of an individual or team to help with your management of portfolios, there are generally less costs involved with DIY investing.

This does come with one extremely important caveat, however: make sure you understand the costs involved with all your individual investments. From fund charges to transaction fees, always read the small print to avoid getting hit with any unexpected deductions.

With managed investments, however, the numbers are usually more straightforward.

At Wealthify, for example, we:

  • Charge a simple annual fee of 0.6% for managing your investments.
  • Keep fund and trading fees low: approximately 0.16% p.a. for Original Plans, 0.70% p.a. for Ethical.
  • Don't charge you for any Plan deposits, withdrawals, transfers, or closures.

Risk Management and Expertise

These two things go hand in hand, in that you can’t manage investment risk effectively without having a certain level of expertise.

With global events and stock markets intertwined, the investment landscape isn’t just changing by the day, but by the second. As a result, knowing when to embrace or reject risk is an art form that takes a cool head and time to master.

With that in mind, ask yourself: if stock markets crashed, would I have the time, knowledge, and ability to protect my own investments — or would I rather let experts do it for me?

Why managed portfolios may be the smarter long-term choice

Make no mistake about it, DIY investing is becoming an increasingly popular portfolio management option in the UK.

In fact, according to Boring Money’s 2024 Online Investing Report: “There was £392 billion in the DIY investment market as at Q4 2023 – a growth of 14% over the year.” [1]

However, the same report also shows that:

  • 7% of investors have less than 12 months’ experience.
  • A substantial proportion of investors have less than 5 years’ experience.
  • The average investor has not experienced a prolonged crash or recession.

So, if you don’t consider yourself experienced – or feel remotely on the fence about managing portfolios yourself – you might want to consider managed investments for the following reasons:

  • Beginners are welcome, with no investment knowledge or experience needed.
  • Professional oversight could help balance risk and reduce mistakes.
  • Automation saves time and stress for busy professionals.
  • You can still have strategies tailored to your financial needs, attitudes, and values.

Choosing the right strategy for you

We’ll end this blog the same way we started it: there’s no such thing as the right portfolio management strategy — only what’s right for you.

To summarise, if you:

  • Are new to investing, short on time, or unsure how to build a diversified portfolio.
  • Want professional expertise in building and managing your money.
  • Are prone to emotional decisions, like panic selling during market dips.

... then managed investments might be your best choice.

However, if you:

  • Consider yourself a confident investor with enough experience.
  • Understand the ins and outs of researching and picking your own investments.
  • Can keep a cool head and make rational decisions during market downturns.

... then you might be ready to take on your own portfolio management with DIY investing.

Regardless, always take enough time before making your final decision and, if needs be, speak to a financial adviser first.

If you are considering the managed investments route, why not consider Wealthify?

With an experienced team of industry experts and award-winning, easy-to-use app, we offer everything from investment ISAs to pensions. Click the banner below to find out more.

 

Please remember the value of your investments can go down as well as up, and you could get back less than invested.

Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.

Wealthify does not provide financial advice. Please seek financial advice if you are unsure about investing. 

 

References:

  1. Boring Money Business | Online Investing Report 2024
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