posted in: Investment Advice

Should You DIY Your Financial Advice, or Pay a Professional?

It’s a fair question, and as someone who loves a project around the house, I get the appeal of doing it yourself. The honest answer is that it depends on the job, and the best way to decide is the same way I decide what to tackle at home: weigh up the risk against the return. Some jobs are worth having a crack at. Some really aren’t.

In this article, I’ll walk through where DIY genuinely works, the one job at home I refuse to touch, the one I’ll happily attempt, and why I put your wealth firmly in the first bucket.

DIY Has Its Place

Let me say up front, I’m not anti-DIY. Far from it.

DIY approaches can be good. I’m a keen DIYer at home, so I’m pretty handy.

So this isn’t a lecture about always hiring someone for everything. Plenty of jobs are perfectly sensible to take on yourself. The trick is knowing which ones, and that comes down to a simple test you can apply to almost anything.

The Job I Won’t Touch

Here’s the one I leave well alone, no matter how handy I’m feeling.

But I don’t DIY electrical, because for me the risk return there is just not worth it. The risk of something going very bad with electrical is pretty high, particularly when I’m not 100% sure what I’m doing. And the return is what I save, a little bit of money on electrical work.

That’s the whole calculation in one line. High risk, low reward. The downside if it goes wrong is severe, and the upside if it goes right is a few dollars saved. When the numbers are that lopsided, the smart move is obvious.

The Job I’ll Have a Crack At

Now compare that to a job where the maths runs the other way.

But with plastering, I’ll give plastering a go. Worst case is I stuff it up and I just have to do it again, or get someone else to do it again.

This is the flip side. Low risk, easy recovery. If I make a mess of the plastering, I sand it back and start again, or call someone in. Nobody gets hurt and nothing is lost but a bit of time. That’s exactly the kind of job worth doing yourself.

Why Your Wealth Sits in the Electrical Bucket

So where does financial advice land? For me it’s not even a close call.

I put financial advice and your wealth in the same bucket as the electrical. The risk of you missing out on an opportunity or making the wrong decision is too big to not just pay to engage a professional.

This is the heart of it. Your wealth has the same risk profile as the wiring in your walls. Get it wrong and the consequences are big and lasting, while the saving from going it alone is small by comparison. It’s the lopsided calculation all over again, just with far more at stake.

You Don’t Get to Go Back to 20

And here’s the part that makes wealth even less forgiving than electrical.

If you get to 60 and you’ve stuffed it up, you don’t get to reset and go back to 20. It’s a bit like a marriage. So we want to make sure you do it once, do it right.

That’s what makes the stakes so high. A botched plastering job gets redone in an afternoon. A botched financial life can’t be redone, because you can’t buy back the decades. The whole point of getting it right early is that there’s no second run at it.

So, Should You DIY It?

I’ll be straight with you, this one isn’t a fence-sit. Some people genuinely manage well on their own, and that’s fine.

Some people do well without it. That’s fine. Much like electrical, I’ve seen people do electrical work when they probably shouldn’t and it ends up okay. But for me, the risk return just isn’t there.

Here’s the principle to hold onto. Run the same risk-return test you’d run on any job around the house. Where the downside is small and easily fixed, like the plastering, by all means do it yourself. Where the downside is severe and permanent, like the electrical, and like your wealth, the small saving from DIY isn’t worth what you’re risking. You only get one run at building your financial life. Do it once, do it right.

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About the Author: Ethan Stein is a financial planner with expertise in investment structuring, superannuation strategy, shares, property investment and other planning strategies. This article reflects general financial commentary only and does not constitute personal financial advice.

Financial Disclaimer: The information provided in this article is for general knowledge and informational purposes only and does not constitute financial advice. Individual circumstances vary significantly. It is essential to consult with a qualified and licensed financial planner before making investment decisions. Past performance of any asset class is not indicative of future results.