Why has self-directed investing come back into vogue?

July 16, 2018

Why has self-directed investing come back into vogue?

It might seem as if today’s investors have never had it so good when it comes to the vast range of financial products they can find at their fingertips. There’s a myriad of equities (UK and overseas), funds, investment trusts and bonds, often able to be placed in some tax efficient wrapper like a pension or Individual Savings Account (ISA), so why are we seeing more companies coming to market, offering investors the straightforward ability to buy or sell shares?   

Whilst funds and investment trusts do provide a convenient one-stop shop offering a quick route to investing your money, quite simply they’re not as good as they used to be. Back in the 1960’s, with only a small number of fund managers, it was comparatively easy for these experts to hunt out the bargains. With many more professionals now in this area, the bargains are harder and more expensive to find. Ultimately, many investors have been left feeling that they are paying a heavy price for what at times was a below-par performance. 

What’s more, if you’re picking each individual company you want to support, you’re the one in absolute control over exactly what your money is doing. With the financial crisis having left many - especially millennials - wary of this fact, it’s as if investors are now readier than ever before to take back full control of their money. 

Remember that when you own a share, you have a real stake in a real business. Typically, that comes with the ability to vote at the Annual General Meeting (AGM), decide who the directors are and on the general direction the company should take. So, if a shareholder wants to object to a specific action the business is undertaking, then they have the right to do so express their opinion even if they don’t have the votes to make a difference. With a managed fund, the fund manager is taking over this role for you and the approach of each institution to exercising - then reporting on - shareholder rights can vary enormously. 

What’s more, many companies offer perks like discounts or free products to their shareholders. This isn’t always popular with fund managers - they would rather have a bigger dividend paid out - but again, if you invest directly then you can tap into this value add.

Perhaps most importantly however is the fact that many financial product providers have collectively failed in appealing to so many sectors of society. The perception that this is still the preserve of wealthy, middle aged, middle class blokes in suits looms large. But new ways of buying shares are surfacing as better technology and innovation drive the opportunity for change right across the financial services sector. 

dabbl is just one example of this, with an app-only interface that makes buying a share as easy as taking a selfie, whilst it has also pushed the cost of trading down to such low levels as to remove this barrier to getting involved. The world of investing has - once again – changed and dabbl is at the forefront of this.

Dabbl Group Limited is an appointed representative of VIBHS Financial Ltd, which is authorised and regulated by the Financial Conduct Authority, under the reference number 613381.© 2016 Dabbl Group Limited. Dabbl ® is the trading name of Dabbl Group Limited (Company no. 09145174) a company registered in England and Wales.

Remember, with investing your capital is at risk, and the amount you get back may be less than you originally invested.