Keen To Try Your Hand At DIY Investment? – Forbes

Keen To Try Your Hand At DIY Investment? – Forbes

A combination of lockdowns, a growing desire by individuals to take control of their finances and the march of technology means the ranks of do-it-yourself private investors have swollen considerably in recent times.

For evidence of this surge, consider the 12 months that followed the first pandemic-enforced lockdown of Spring 2020. According to a report on UK investing habits by consultants Boring Money, an eye-popping 950,000 investment accounts alone were opened by ‘DIY’ investors during this period. 

Whether you’re a rookie trader or a seasoned stock picker, or you’re just looking to take an occasional punt on the market, armchair investors are spoilt for choice nowadays when it comes to buying shares, assembling a portfolio of funds, or gaining exposure to more sophisticated financial instruments.

Here’s a look at the rise of DIY investing, along with a lowdown on the options available to investors, plus the factors to bear in mind when choosing a share dealing service.

DIY trading on the increase

Several factors have fused together to turn DIY trading into an increasingly popular activity over the past few years.

Most recently came ‘lockdown boredom’. A period that prompted people with pandemic-related disposable income, along with time on their hands, to consider share trading as an activity that they could carry out from the confines of their home.

Alex Lambert of broker Hargreaves Lansdown says: “The last two years have highlighted the importance of taking responsibility for your own financial resilience, leading to a surge of younger people engaging with their savings and investments.”

Fear of missing out helped fuel this interest as well. During the pandemic, greater stock market volatility meant that, for savvy traders, there were opportunities to capitalise from big gains. Shares in the electric vehicle maker Tesla soared by over 700% during 2020, for example, an extraordinary return for a major corporation over such a short period of time.

Contributing factor

The pandemic to one side, broader financial factors were already contributing to a push in armchair trading. For example, the UK’s prevailing interest rate environment, already low before Covid-19 sent it to historic rock bottom levels, meant there was little or no reward for savings squirreled away in bank accounts.

Exposure to stock markets, although far from risk-free, offers investors the chance of counteracting the double-whammy from low interest rates and the erosive effects of inflation, by generating real returns on their money.

What’s more, since the government’s introduction of so-called ‘pensions freedoms’ in 2015, there has also been a desire by an increasing number of people to take control of their finances and become more ‘hands on’ with their investments.

Mr Lambert adds: “Across the industry there’s been a massive surge in people engaging with their financial affairs, assessing their own personal financial resilience, and taking a greater interest in saving and investing.

“This is hugely positive for society given our savings gap but the shift also comes with its risks”. 

There are no guarantees when it comes to playing the stock market, a sentiment that investors of all stripes, from newbie to veteran, should constantly bear in mind.

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