How to Follow DIY Investing for Retirement

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This is a guest post by Brendan Lee Young, CEO of Passiv. Passiv turns your brokerage account into a modern portfolio management tool. 

DIY investing – short for do-it-yourself investing – has become increasingly popular.

This is because it is a low-cost, customizable way to build a long-term investment portfolio.

Unfortunately, the finance industry wants you to believe that investing is difficult and that you need a finance degree. The truth is, you don’t have to be a finance professional to invest in the stock market. However, there are a few concepts and strategies you should understand before you begin managing your investments. In this article, I will teach you how to follow a DIY investing strategy for retirement.

Develop a Systematic Investing Strategy

The first step in following DIY investing for retirement is determining your systematic investing strategy. More specifically, you should decide how much you’d like to contribute to your portfolio on a regular basis. The amount that you contribute to your retirement portfolio depends on:

  • Your income

  • Your savings rate

  • Your time horizon before retirement

Make no mistake – regular contributions are a very important part of a DIY investing plan. They allow you to take advantage of dollar cost averaging, which is the concept of purchasing the same dollar amount of an investment each month. This allows you to buy more of an investment when prices are lower – capturing the age-old investing principle of “buy low, sell high”.

Determine Your Asset Allocation

“Asset allocation” refers to the percent of your portfolio that is invested in various asset classes.

As an example, here is a hypothetical asset allocation that an investor might follow:

  • 30% US stocks

  • 30% international stocks

  • 20% US bonds

  • 20% international bonds

Unfortunately, there is no “one size fits all” asset allocation. You will need to create your own. Your personal asset allocation should be a reflection of your personal situation, including your investment objects, risk tolerance, and time horizon. This online questionnaire from Vanguard may be helpful to you when determining your asset allocation.

Build Your Portfolio

Now that your asset allocation has been determined, you’re ready to build your portfolio from scratch. The best way to do this is by using a diversified basket of low-cost ETFs (which is short for exchange-traded funds).

To do this, you’ll need to create an account with an online broker. There are a number of online brokerages out there, including TD Ameritrade, Interactive Brokers, and Questrade (if you’re in Canada).

There is no “perfect” broker – they all have their pros and cons. With that in mind, here are a few factors you should consider when selecting a brokerage to build your DIY portfolio for retirement:

  1. Free ETF trades

  2. Low account fees

  3. Low account minimums

  4. Excellent customer service

  5. The reimbursement of account transfer fees

  6. Security

  7. Access to tools

Once you have selected an online broker, you’ll need to fund your account. Brokerage firms generally allow you to do this using the online bill payment interface from your financial institution.

When your funds hit your account, it’s time to purchase the ETFs that match your asset allocation! If you’re unsure about which ETFs you should use to build your portfolio, free websites like can be excellent resources for this.

Stay the Course and Rebalance When Needed

Once your account is set up, regular contributions have been specified, your asset allocation is set, and your ETFs have been purchased, the only thing you need to do is stay the course and rebalance as needed. Most investors do quarterly or semiannual rebalancing, since anything more than that can create unnecessary friction for the investor. Purchasing the underweight assets in your portfolio each time you contribute is another way you can stay balanced. If you’re looking for help with rebalancing or finding the underweight assets in your portfolio this  rebalancing tool can help you. Alternatively, you can build your own rebalancing spreadsheet or search for ones created by others online. If you decided to use someone’s spreadsheet you may have to tweak it to make it work for you. Lastly, the most important aspect of investing for retirement is staying disciplined. If you don’t stick with your investment plan even in the midst of a recession, you may lose more than you’ll ever gain on your investments. Remember, the time you spend in the market is more important than trying to time the market.

It can be scary to see your investments decline in value. The key thing to remember is that in the long run, the market always recovers. If your investments are down and you sell to avoid further losses, you’re actually locking in those losses.On the other hand, don’t get too greedy or try to chase getting high returns. Especially, if you’re buying a hot stock that’s getting all the praise in the media. I’m usually skeptical of what the media has to say about a particular stock. Mainly because I believe that it’s in the media, it’s probably too late.

Final Thoughts

Following a DIY investing strategy is an excellent way to build your retirement portfolio.In this article, you learned how to follow DIY investing for retirement. More specifically, here’s a summary of what we discussed in this article:

  • Why DIY investing is an excellent strategy for building a retirement portfolio

  • Why it’s important to set up regular automatic contributions to your investment portfolio

  • The factors that you should consider when creating your asset allocation

  • How to build your DIY portfolio from scratch

  • Stick to your investment plan and avoid the noise in the media


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