Learn about the five key benefits of self-directed investing, to decide if it’s the right path for you.

by | Nov 14, 2023 | Insights

The Five Advantages of Self-Directed Investing

The question is not: What do you lose when you take control of your investing strategy? It’s: What do you gain?

The advantages of self-directed investing are multifold, boiled down here to five key benefits.

1. Self-directed investing gives you autonomy.

Self-directed investing gives you full control over your financial future by allowing you to make your own investment decisions. 

For example, you can take advantage of the ups and downs of particular value stocks by paying attention to activity around these assets before big changes occur — buying and selling at advantageous times.

2. Reduce fees, maximize returns.

By bypassing the management fees associated with traditional funds and financial advisors (generally ranging from 0.2–2% of your invested assets, often in exchange for subpar performance), you can potentially increase your overall returns. You may still have to deal with brokerage fees as well as backend costs like payment for order flow (PFOF). However, cost savings can compound over time, significantly impacting your wealth accumulation.

Additionally, you can ramp up returns by sticking to your self-directed strategy. With education, you have the potential to outpace one-size-fits-all solutions and manage your capital gains.

3. Understand how your money works in the market.

With self-directed investing, you have the chance to develop a deeper understanding of how your money works in the market. You’ll learn to analyze opportunities, track your portfolio’s performance, and stay informed about market trends. 

Plus, the process of self-directed investing typically invites connection with other investors on their own strategies, giving you a wider perspective about what works.

4. Personalize your diversification.

Manage risk and reach your goals in one fell swoop. You can spread your investments across various asset classes, industries, and geographic regions. 

Additionally, you can prioritize types of investments such as value stocks, which are rooted in fundamentals that suggest the market is undervaluing these assets.

5. Have fun.

Self-directed investing is an opportunity to explore the world of finance, discover investment opportunities, and watch your portfolio grow. Having fun while investing can motivate you to stay engaged and committed to your financial goals over the long term.
For some, entering the world of investing is more intimidating than inviting. But it makes sense to be a custodian of your own financial fate. At its core, this is what self-directed investing provides — freedom, empowerment, and the ability to thrive.