Question No. 6

"What if I Don't Want to Spend Much Time Managing My DIY Pension,
How Can I Still Outperform the
So-Called Professionals?"

Our Response

Let's get real.

You cannot just set up your DIY Pension and forget about it.  Nothing in life is like that.

If you really want a completely hands-off approach then we would suggest you stay with a managed Pension Fund.

There are however, two routes for you to go if you want to take advantage of a low-cost DIY Pension.

The first of these is to invest in a Fund that tracks an Index such as the 'Dow Jones Industrial Average' (DJIA) or the 'FTSE100'. Various 'Exchange Traded Funds' (ETFs) will do this for you.

The second option is to pick out the individual shares that appeal to you and simply place your money into these.

Neither of these options would be ideal.  But at least they would employ, to some extent, the principle of buy and hold. (Assuming that you did indeed buy them, and hold them).

But the clue is in the title:  DIY Pension.  It's just that:  Do It Yourself.

"What's the MINIMUM Amount of Time
To Spend on a DIY Pension?"

We can accept that some folk may not want to spend a lot of time monitoring their Pension but it's just not feasible to spend NO time at all on it.

We reckon the minimum amount of time that you should spend is about half a hour per week.  But we stress, that's an absolute minimum.

Managing your own Pension is not that difficult.  You should understand what is involved before you pooh-pooh the idea.

Let's break down what's involved in running your DIY Pension.

First up, you need to decide what to invest in.  As already mentioned, this can be Funds, ETFs, or Individual shares.

Our preferred route is individual shares (same as Warren Buffett), and that is what this website encourages.

Either way, it will require SOME of your time to monitor your holdings.  It would be folly to buy investments and simply forget about them.

Here's the key ...

You must spend time in the beginning to decide which investments you want to trade in. There is a learning curve here, but it's not a very steep one.

Warren Buffett reckons that throughout your lifetime you only need to be acquainted with about 20 or so shares.

That may be OK for someone like Mr. Buffett but us mere mortals cannot possibly do the intensive research that he and his team have the resources to do.

Most of your time commitment will be when you first start out.  Although if you really want your DIY Pension to succeed, you'd be well-advised to spend time throughout the life of your Pension. And that means every week.

If you want a fairly hands-off approach you will need to decide which shares you want to trade in and also decide how much time you want to commit.

Set up a watch list of all your chosen shares.

Then, buy them at the right time.  The only time you need to spend on them thereafter is the monitoring of your holdings. Our preference is to do this at the end of each day.  But as an absolute minimum, at the end of every week.

This is, after all, a DIY Pension.  No one else is going to do it for you.

"Finding the Right Value Shares"

Every private investor's dilemma is finding the right companies to invest in.  We all have that problem.  But this website shows you how.

If you discover a genuine value share, be patient and wait to buy at the right price, that way you'll sleep well at night.

Finding the right value shares may not take as long as you think.

Whether you dig into the DJIA or the FTSE100 you are sure to find plenty.

The same principle is described on our website.

You buy these 'value' shares at the right price, and you sell them when you get a signal to do so.  And then you buy them back when you get another signal that tells you to do so.

And you keep buying and selling these same shares as long as the fundamentals remain valid.  (Remember Warren Buffett has gone on record as saying you need only major in 20 shares throughout a lifetime?)

It is clear from the above that you will need some basic tools.  A basic software package is essential. 

There are free tools available but we don't like using them.

Our website has a whole section dedicated to using the right tools.  But we also recommend that you keep these to an absolute minimum.

Conclusion

Time to spend on your DIY Pension is, for a lot of people, difficult.  They lead busy lives.

But we've always maintained, that if you want something doing - then give it to a busy person.  They find the time. They work efficiently. Managing a DIY Pension should be no problem for these type of people.

Are you in this category? 

A DIY Pension does require SOME time spending on it.  Investing for your future will not do itself.  It's called DIY for a reason.

However, if you do some up-front research (a few hours) then the only other 'chore' you will have is monitoring your watch list.

Monitoring your watch list and your portfolio daily is our preferred option.  Monitoring your watch list weekly is also acceptable.  Any longer than weekly is not recommended. You need to keep in touch, even if this means you don't take any action for months, or even years. You don't want to miss a major move or turning point.

It's largely about effort versus results.  The more useful time that you put in, the more successful you are likely to be (especially at the research stage).

Who knows, you may think that you have very little time right now, but when you come to realise the vast benefits of a DIY Pension, you may become hooked on the idea.  So many people do.

Footnote

As a newbie, you may want to read the other "Frequently Asked Questions" on this website.  Doing so, will give you a good introduction to running your own DIY Pension.

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