How to invest confidently without a financial adviser

Why most people don’t need an adviser 🙅

Investing has become accessible to all in the last few years, but yet so many people are still not confident investing on their own.

It might seem that the only way to do it is through getting a financial advisor, but it’s completely possible to do it yourself.

In fact, research shows that when people invest by themselves, they often do better than those with a financial adviser as fees can eat into the returns.

Advisers usually charge 1-2% fee on your investments (or assets under management AUM) and this can reduce your portfolio returns.

Over the years paying financial adviser even a 1% fee can result in 28% loss on your investments due to compounding effect.

What’s worse -

The advisers don’t try to beat the market, meaning they can often achieve very average results while still charging you a fee.

Almost no fund managers can beat the market over a long term.

How to confidently invest by yourself 📈

• Learn the basics of investing 📚️. There are tons of resources you can learn from - books, YouTube, podcasts, this newsletter! It helps to understand how the stock market works in principle and while you do need to know the basics, you certainly don’t need to know everything before you start.

• Take advantage of robo advisers 🤖. These beginner easy platforms (Nutmeg, Moneyfarm, InvestEngine) can help you decide what kind of investor you want to be and help you choose investments.

  Once you understand investing more, move to a DIY platform (Vanguard, AJ Bell, Hargreaves Landsdown, Trading 212, etc.) where you can choose your own funds, stocks or assets and build a portfolio.

• Start small 💰. You can start by investing small amounts and as you build confidence, increase it. If you make some mistakes, these won’t feel as big on smaller amounts.

• Use pre made funds 💎. Utilise target date, platform own funds and index funds. For example, Vanguard has Target Retirement, Life Strategy and many index funds to choose from. These are usually low cost and offer the best value for money for their investors. You could choose one fund and invest in it for life.

• Diversify your portfolio 🌎. Use global funds that invest into thousands of different stocks. You can also acquire bonds and other assets in your portfolio, especially as you get nearer to withdrawal.

• Automate your investments 🔄. Set up a monthly transfer to invest in your chosen funds. This way you will benefit from dollar cost averaging.

• Invest for the long run 🏃‍♀️. This is where compounding does its magic. The longer you invest for, the crazier the numbers will get. If you stay invested, you will also be able to ride out the dips in the market.

• Choose a flat fee advisor 👩‍💼. If you still want financial advice, choose an hourly fee independent adviser instead. This can save you tens or even hundreds of thousands of pounds over the long term.

My weekly recommendation

I recently came across an author of The Simple Path to Wealth and godfather of financial independence JL Collins. His simple strategies on building wealth and investing are brilliant.

Great episode with him on The Money with Katie show you shouldn't miss!