It is a lot of fun being a DIY investor. Just be aware that it takes also a lot of time, talent and temperament. When I heard first about this TTT, all elements fell in place. By understanding these Ts, I am able to understand my investing approach.
Being an investor takes time. For some people it takes 1 hour per year, for other people it is more than a full time job. It is up to you to define where you want to be on this axis.
Why does it takes time?
You need to research what you plan to do. Define your asset allocation, define your risk tolerance, study these subjects, see what you want to invest in. Reanalyse every now and then.
You need the time execute the plan. The execution of the plan can be highly automated if you wish to do so, or it can stay very manual where you execute yourself each step in the process.
This looks at how disciplined you are with your investments and how you deal with paper losses. Can you stick to the plan you defined, no matter what? Or will you abandon the plan and sell all with the first paper loss you make? Do you rebalance when needed?
Each investment styles comes with its own set of actions you need to take. All investment styles will at a certain moment be challenged by a paper loss.
It comes down to have the right talent to invest. There are a lot to things to know and a lot of skills to master. Some ways of investing require almost no talent, other styles require you to master multiple skills at the same time.
Understanding where you are or want to be in this T defines what style is suitable for you.
Investment style analysis
Let me know how you think about this. The question that I have: How would DGI fit into this, especially compared to option investing.
Do your research
For each investment style, you can find with almost no effort a list of bloggers that practices a specific style. Some even combine different styles. By reading from them, you get a better understanding of what it takes.
Personally, I apply a mixed – or hybrid – investing style where I combine index, options and plan to add DGI in the future.
What is your style? How do you rate your individual investment styles on Time, Temperament and Talent?