Nigel Farage appears to be advocating a DIY approach to investing – and this could be “monumentally risky” for inexperienced investors, warns the CEO of one of financial advisory and fintech deVere Group.
A daily finance-orientated newsletter from the team of the Brexit Party leader and political activist urged its readers to “tell us about your successes by going it alone – leaving the money men and middlemen by the side of the road…”
Successful DIY (Do It Yourself) investing can be possible, said deVere’s Nigel Green, chief executive and founder, but for most people it is not recommended – indeed, it could be a costly and traumatic accident waiting to happen.
“Going it alone can be monumentally risky for inexperienced investors as the complexities involved can sink their portfolios,” warned Green.
“Perhaps this is why around two-thirds of wealthy individuals have a professional financial adviser of some sort, according to new independent research from the University of Toronto.”
Green added that he would urge anyone who extols the virtues of a DIY approach to investing to also underscore the risks and potential pitfalls to be avoided.
A pro will help you make the best investment decisions in five key ways, he said.
“First, helping you to diversify a portfolio. Spreading money around is vital to curb risk. However, it must be used correctly – diversification will only add real value if the new asset has a different risk profile.
“Second, investing with a plan: Unless you have a sound plan, you’re gambling, not investing.
“Third, avoiding emotional decisions. Overly emotional decisions can prove deadly when it comes to investments because they are blighted by prejudices and biases.
“Fourth, regularly reviewing your portfolio: Investments need to be consistently reviewed to ensure they still deserve their place in the portfolio and that they are still on track to reach your long-term financial objectives.
“Fifth, not focusing excessively on historical returns: The future investment situation is likely to be different from time-aged averages.”
Green concluded that while investing remains almost universally regarded as one of the best ways to create, grow and safeguard wealth, “considering the pitfalls of getting it wrong, it could be an expensive mistake for you and your family not to seek professional advice.”