Do-it-yourself investing- Introduction

[updated August 27, 2013]

The goal of do-it-yourself investing (DIYI) is to maximize returns by making good investments without paying unnecessary financial-services fees.  Making good investments by the do-it-yourself approach requires more effort than working with a competent professional advisor.  DIYI earns an approximate 1% gain in returns that is otherwise lost by the payment of advisors’ fees.

Background:  The opportunity for DIYI originated in the World’s first secondary stock market founded in Holland during the 17th century4.  Centuries later, millions of household investors entered the stock market after Congress authorized the “401(k)” tax-deferred savings program for employees in 1978.  The 401(k) converted spenders to savers and launched the era of do-it-yourself investing for retirement1.  Today’s households are “forced capitalists” who must invest for a long time to send children to college and live in retirement.  They have no interest in quarterly earnings reports or tricky bursts of cash compared to the traditional investment goal of sustainable growth 2.  As of 2013, the typical middle class household nearing retirement has saved only $120,000; about 1/10th of the necessary savings1.

Dimensions:  DIYI is a personal journey into the world of Finance that involves buying and selling securities for small or large amounts of money according to investment decisions made without purchasing the advice of professional investors.   The carefree investor relies on intuition that is less likely to produce good investment decisions in contrast to the deliberate investor who seeks information for making good decisions.  Skill is sharpened by experience and education.  Time favors the outcome of DIYI by people of all ages, but especially by young people.

Principles of do-it-yourself investing

  1. Invest a dime from every dollar earned 3.
  2. Seek free advice from good books and wise investors.
  3. The basic goal of investing is to beat inflation.
  4. Avoid taxes by opening a tax-deferred brokerage account.
  5. Minimize the impact of trading fees.
    1. reinvest the returns for free (this is how compounding works!)
    2. consider investing in exchange-traded index funds and no-commission mutual funds
  6. Protect your estate with the proper insurance.


1.  Scott Tong, Father of the 401(K): It could be better. Marketplace, 6/13/2013.  American Public Media © 2013.

2.  Leo Strine. Toward common sense and common ground. The Journal of Corporation Law 33 (1), 2007, sited in John C. Bogle, The Clash of the Cultures, Investment vs Speculators.  John C. Wiley & Sons, Inc.  Hoboken, 2012.

3.  George S. Clason, The Richest Man in Babylon. Penguin Books, New York  © 1955, .., 1926.

4.  Lodewijk Otto Petram, The World’s First Stock Exchange.  ACADEMISCH PROEFSCHRIFT, Amsterdam University, January 28, 2011.

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