Know Yourself: 5 Qualities Direct Investors Share

Wondering if you have what it takes to manage your own investments? Before you jump in, consider these five things to help determine if direct investing works for you.

1. You like the idea of financial control.

No one cares about your financial success more than you do. By doing it yourself, you're in control of your money and you might save on fees, which can potentially mean larger returns.

2. You can handle ups and downs.

Most people emphasize the technical aspects of investing – choosing investment products and strategies, reading annual reports and financial statements – but emotions can also impact investment outcomes.

It's relatively easy to stick to an investment plan – until there's a sharp change in market direction. How would you respond to big uptick or downturn, or to a hot stock tip from a friend? As a do-it-yourself investor, you have to navigate these situations without input from a professional advisor. If you're unsure of your emotional and behavioural tendencies, treat yourself as a test subject. Start a risk-free practice account or open a small investing account, so you can observe your reactions to market and business cycles. Understanding your tolerance for volatility will help you avoid common investing mistakes.

3. You're a lifelong learner.

Are you naturally curious? Do you enjoy reading and doing research? As a do-it-yourself investor, you'll need to stay on top of market and business news. Lifelong learning is key to successful investing. And often, investors who have a personal interest in a particular sector or cause like to explore how it could fit with their investment goals.

4. You want to make time.

If you become a self-directed investor, you will need to follow financial news, monitor the performance of your investments, research new investment possibilities and rebalance your accounts. Ask yourself: “Do I want to make the time? Is being a self-directed investor right for me?" How much time you need will depend on your investing style.

5. You have a plan.

Most people wouldn't go on a road trip without a map, yet many self-directed investors jump in without a plan to guide their decisions. Your financial goals, budget, life stage and tolerance for risk are just some of the factors to consider. Don't skip this step – having an investment plan will also help you stay the course during market turbulence.