Toronto Mike

5 Tips to Become a Better Self-Directed Investor

Controlling your investments has become easier with online investment tools. Every investor has future goals and plans, and becoming a better self-directed investor can set you up for success.

Whether you're a skilled investor or new to investing, there's always something you can improve to become better at your investment strategy.

Read further to learn more about how you can become a better self-directed investor.

1. Keep it Simple

Not everyone has the time to obsess about the market and look for bargain investments to give them high returns. Investing doesn't need to be complicated, so why complicate it?

By keeping it simple, your money can go into investments where you don't need to overthink it. As a self-directed investor, you can manage your investments with peace of mind.

If you're not already doing so, you can utilize a robo-advisor to do all the hard work for you. Robo-advisors are a great way to invest as they offer investors online portfolio management services with no interaction between the investor and portfolio manager. If you're unsure which is the best investment platform for you, compare robo-advisors and their fees, management styles, etc.

2. Be Patient

Your investments won't grow overnight, so you need to remain patient. Investments, whether short or long term, need time to grow and generate profits.

If you're investing in stocks, you'll need to be patient with the companies you've invested in. Share prices fluctuate daily, and watching your investments lose or make money daily is going to make you paranoid.

Be patient and hold onto your stocks when share prices fall. By being patient, you can get rewarded over the long term.

3. Don't Stop Learning

Self-directed investing is a lifelong learning opportunity. There are two areas of investor education, namely intrinsic and extrinsic investing.

Intrinsic investing: Focuses on the behavioral aspects of investing. It consists of knowledge of investor psychology and temperament and includes your personal goals and values.

Extrinsic investing: Focuses on the technical aspects of being an investor, including researching stocks, personal finance, asset allocation, portfolio balancing, etc.

It's essential to combine both intrinsic and extrinsic investing skills to expand your financial expertise. Self-directed investors have access to several resources to increase their financial literacy.

Reading about investing and having conversations with other investors will also help you become a better self-directed investor. You can learn from other investors' mistakes and help others learn from yours.

Become a better investor by applying what you learn, and over time your investment returns should improve.

4. Take Control of Your Emotions

Even skilled investors can let their emotions get in the way of them making sound financial decisions. This tends to happen mostly when the markets are volatile. When you let your emotions take control, you panic and sell your shares at a lower price, and you lose money.

If you're struggling with emotional investing, learn to remain calm. Change your mindset and think of your investments as long-term and avoid thinking of them as short-term assets with daily fluctuations.

5. Embrace Technology

Robo-advisors are online portfolio managers offering low-cost solutions to investors. These robo-advisors provide investors with portfolios that get matched automatically according to each investors' needs.

If you're looking for a more hands-on approach, consider investing with an online broker. Online brokers let self-directed investors choose with assets they want to buy and trade, such as exchange-traded funds (ETFs), bonds, and stocks, without any assistance from an advisor.

Online brokers often get referred to as discount brokers, such as Questrade and Interactive Brokers, as they have considerable cost savings. Both online brokers and robo-advisors cut out the middleman and lower trading fees, so you get to pocket the difference.

Do your research before choosing the best online broker or robo-advisor for you, as each brokerage offers its perks.


Through proper research and careful planning, you can become a better self-directed investor. Build a diverse portfolio suited to your investing goals using an online broker or taking control with a robo-advisor.

Self-directed accounts provide you with the necessary tools to save on costs and reduce administration. The future of investing is online, so improve your investing skills, and you'll be successful in the long run.

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About Toronto Mike
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