“It’s complete chaos”. The mistakes DIY investors make, according to experts

"The biggest mistake DIY investors make is thinking they can time the market. You cannot, I cannot, nobody can. You can get lucky once or twice but you cannot consistently predict how the market is going to move. Therefore, DIY investors make bad decisions about when to buy and when to sell. The second biggest mistake DIY investors make is thinking they will always make rational decisions. They will not. It is human nature for us to make emotional decisions, even when we know what we should be doing. Getting this wrong just once in our lives can be the difference between a comfortable financial future and a stressful financial future."

"The biggest mistake is cashing in investments in times of panic. I spoke to an investor who declined my offer of service. Then, Liz Truss had her fun, and the fixed-interest funds in his pension were halved in value, at which point he cashed in. This would never have happened if he was working with an adviser. He later called me back and now we are working together to make the best of a bad situation. Having an adviser on call in times of panic must be the greatest benefit."

"One of the most frequent mistakes I encounter among DIY investors is investing without adequate research. For example, some overlook transaction fees, such as a client who faced a 4% charge to exit an underperforming fund. Others may concentrate on a single asset or engage in unregulated investments without fully grasping the associated risks. Many DIY investors fail to distinguish between investing and gambling. Thorough research and knowledge are essential tools for any self-directed investor. While market fluctuations are inevitable, investments grounded in research and aligned with personal objectives can transform volatility from a gamble into a natural part of the investment journey."

"DIY investors are typically younger and are comfortable using online only non-advised services. When I come across them they are making every mistake that is possible to make all at once. It's complete chaos. However, they are often very happy with the situation and oblivious to how vulnerable they are even if they have already suffered losses. All said I wouldn't want the ability to self-service not to exist but I think a little self education is needed before starting down this path. Everyone should at least get to know the alphabet of investing before putting their hard-earned money at risk."

"Outside of broader problems like being undercapitalised and thinking they can turn £10,000 into £100,000 in three months, the key problem I see is DIY investors looking at low cap stocks as being their saviour. They aren't. Low cap stocks are low cap for a reason and it's very rare that the half a penny stock will become 20p (and that's not even considering that when it hits 20p, the retail investor will almost certainly hold out for 25p, round dripping their entire position and making nothing in the process). At the higher end, a more specific issue with retail investors and traders is that they try to extract alpha when really they should be understanding the game they're playing, which is extracting beta. Leave alpha up to the quant hedge funds. Risk manage your beta extraction, i.e. capture market returns via trends, narratives rather than a strategy that is market-beating for periods doing complex things that usually rely on expensive infrastructure."

"Usually clients seek financial advisers after they have made mistakes. The most common DIY mistake I have seen is selling during a big market correction or crash. Market falls are certainly scary and can be very tough to navigate without advice. Investors during these times often feel they should be doing something and taking action to protect their portfolio. This almost always leads to wealth destruction as they often sell to cash, and don't get back in until the market is higher. Having an adviser over this period would have saved them lots of money."

"The only mistake is to invest without a financial plan. All the other 'mistakes' cascade off this primary one. An investor without a plan is a boat in a storm with no anchor. She will get pulled this way and that and will eventually sink."