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Why DIY Investing Is Like 11-Year Old Math

Why DIY Investing Is Like 11-Year Old Math

May 08, 2024

My son has a huge math summative test coming up in the next few days, which will decide whether he takes either Advanced Math next year, or, as puts it, "Normal Math."  Obviously I want the best for my kid, so I'm encouraging him and helping him study hard to get into Advanced Math.

He received a lengthy review packet from his teacher, and he was SO proud to get a perfect 100 on it!  I knew this wasn't normal for him, though, because while he's a pretty good student, he's not a "100 in math" kind of kid. 

So, I started to review a couple of his answers...

The first two questions I reviewed were WRONG, even though the teacher marked them correct!  Yet my son swore up and down that he knew how to do this math, even though it took me about 10 seconds to find two wrong problems.  And, of course, we found more problems that were wrong even though the teacher didn't count them as wrong.

So how is this 11-year old math like DIY investing?

I have encountered many DIY investors over the years, and they almost always believe that they are doing a great job investing because their accounts are growing. 

Well, their accounts SHOULD be growing, especially as they contribute more money!

However, there's no one to "double check their work", to ensure that their investments aren't too risky or aggressive, OR too conservative. Taking too little risk may not help them accomplish their future financial goals, while too much risk could see most of their investment wiped out, usually at the worst of times.

I have lots of respect for clients who take an active interest in their financial future by learning about stocks, bonds, mutual funds, ETFs, etc. Before becoming a financial advisor, I "dabbled" in investing myself, usually following the advice of my coworkers who I thought knew more than I did.

After I became a financial advisor, though, I realized that there is SO much more to learn about investing.

And I could actually BE the "teacher" to check someone else's work, to ensure that my clients are investing in ways that will help them accomplish their goals, rather than investing based on advice from social media, strangers, family, and/or co-workers.

(In addition to investing, comprehensive financial planning takes into consideration how a client's debts, savings, income, taxes, life / home / auto / disability / long-term care insurance and retirement accounts interact with each other, much more than a typical DIY investor takes into consideration when investing). 

After checking my son's math review sheet, I wished his teacher had taken a little more time to review his answers, to help prepare him for what's ahead.  Instead, I became the bad guy telling him that he was wrong, and that simply double-checking his work would have made all the difference.

If you're a DIY investor, have a professional financial advisor double-check your work.

It could be the difference between an "Advanced future" or "Normal future".