Self-directed Investing

Self-directed investing is a way you can build and manage your own investment portfolio.

A growing number of Canadians are choosing to manage their own investment portfolios instead of working with a registered investment advisor.

Self-directed investing, also known as DIY (do-it-yourself) investing, is a method of building and managing your own investment portfolio without the direct guidance of a registered investment advisor. Self-directed investors are in charge of their own investment strategy: they do their own research and use online trading platforms, tools, and resources to manage some or all of their investments.

This approach can offer greater control, flexibility, and often lower fees – but it also requires time and effort, a solid understanding of investment markets, and recognition of risk.

According to BCSC research, self-directed investors have diverse reasons for managing their own portfolios.

Who are Canada’s Self-directed Investors?

According to the BCSC’s DIY Investing National Survey:

• 43% of Canadian investors have some self-directed investments. Of those, over half say they manage most of their investments themselves.
• Self-directed investors are more likely to be men, have good digital and financial literacy, and are willing to take more financial risks.
• Self-directed investing is most popular among younger Canadians, especially those under 45.
• A growing number of self-directed investors are racialized persons, reflecting Canada’s changing demographics.

The top reasons why Canadians choose to manage their own investments include:

• More control over their financial future.
• Convenience of online platforms.
• Lower costs compared to traditional advisors.
• Desire to generate additional income or a chance of a large return.

What are the Goals of Self-directed Investors?

All investors – regardless of whether they are primarily advised of self-directed – are mainly focused on long-term goals like saving for retirement. However, self-directed investors are more likely to invest for extra income, big profits, and to have fun.

Five Key Segments of Self-directed Investors

The study identified five distinct groups of self-directed investors, based on how active they are with their portfolios.

Hands-Off

Nearly 30% of self-directed investors fall into this group – the largest segment. Most don’t work with an investment advisor, and they tend to follow a “set it and forget it” style of investing: they tend to make automatic contributions to their investments, aren’t checking their accounts every day, and most aren’t spending much time researching new investments or strategies. They most often hold stocks, mutual funds, and term deposits. They’re saving toward retirement or other long-term goals and most prefer to avoid risk.

Hyper-Engaged

Around 1-in-5 self-directed investors are all-in. These are often younger, male investors who check their accounts multiple times a week, trade frequently, research constantly, and hold assets like stocks, crypto, and ETFs. They’re most likely to turn to online and social media sources for information about investing. Most don’t use an investment advisor. They like to do it all themselves – and they enjoy it. This group prioritizes investing as a tool to reach retirement and other long-term goals, but also as a way to generate additional income.

Hobbyist

Also making up about 1-in-5 self-directed investors, Hobbyists can be described as a mix. Most work with advisors and enjoy the convenience of having one, but still like to actively manage parts of their own portfolio. They are very engaged with their portfolios. This means trading frequently, spending time researching, or a bit of both. They’re more open to risk and commonly hold stocks, mutual funds, and crypto. When it comes to decisions about money, they rely on their bank or investment advisor and on information found online, on social media, and through their own research.

Secondary DIY

Just over 10% – the smallest of the segments – fall here. They have an advisor who manages their main portfolio, but they dabble with self-directed investing on the side. They trade and research occasionally and tend to be more risk averse. Some choose to handle some of their own investments to boost their financial literacy, but they still turn to their advisor for most investing advice.

Dormant

The least active and most hands-off group, Dormant investors may or may not have an advisor and rarely engage with their self-directed accounts. Retirement-age women make up most of this demographic. They tend to have a higher net worth and are not willing to take on risk.

Are you a self-directed investor and curious which segment you fall under? Take our Self-directed Investing Quiz to find out.

Is Self-directed Investing Right for You?

Self-directed investing isn’t without its challenges. It requires time and effort to research and monitor investments, stress and other emotions can impact decision-making, and it can be easy to make decisions based on unreliable information sources.

To determine if you want to be a self-directed investor, think about your financial goals, your time horizon, your risk tolerance, and your investment knowledge.

You may want to consider self-directed investing if you:

• want to be hands on with your investments and develop your own investment plan.
• want to pay lower fees and invest in what you want.
• can manage your investments without outside advice.
• can remain actively engaged with buying and selling your investments to help you reach your financial goals.
• are comfortable with using online technology to manage your investments.

Before diving into self-directed investing, ask yourself:

• Do I have time to research and manage my investments? According to BCSC research, 1-in-5 former self-directed investors stopped because they didn’t have enough time to continue effectively managing their own portfolios. Reading about the investment products you are considering purchasing and monitoring your portfolio are key to staying on track with your goals. It’s important to do this regularly to ensure you have the right mix of investments in your portfolio. You should do this even if you have an investment advisor.
• Am I comfortable making financial decisions on my own? Do you want to self-manage your entire investment portfolio, or just a portion? It doesn’t have to be all or nothing – 1-in-5 investors manage less than 50% of their portfolio on their own, and work with an investment advisor for the rest. Consider whether a hybrid approach might work best for you.
• Do I the different investment products? From ETFs to GICs, do you know the differences and risks associated with the many different types of investment products? Check out this video to learn more about common types of investments.

• Do I understand the risks involved? Investment markets move up or down daily. Emotional decisions made purely on market movements can have detrimental effects on your portfolio’s performance. Furthermore, trading fees from moving back and forth between investment products can eat into your returns. Successful self-directed investors develop and follow a disciplined investment strategy that diversifies their investments. They stick to their strategy and do not follow their emotions, especially when markets are volatile.

• Can I identify trustworthy sources of information? It’s easier than ever to find an abundance of investing information online – and harder than ever to know what’s real or trustworthy. You may find financial advice from so-called money experts, but social media is also rife with artificial intelligence (AI) investment fraud and other scams. Always consider the source of the investing information and its claims. Take the time to do your own research or consider consulting an investment professional making any investment. seek our unbiased investor education resources. This includes the investor tools available from the Canadian Securities Administrators, Ombudsman for Banking Services and Investments, and the Canadian Investment Regulatory Organization
• Do I understand fees and charges? Self-directed investors typically pay lower fees, but they still exist. Be sure to ask about or do your research on all the fees and other charges you will be paying when you use discount brokers and online trading platforms. It’s important to read the information provided to you and ask questions if you are not clear on what you are paying for investments and/or advisory services.