Is DIY portfolio implementation right for you?

If you work with me, one option available to you is to take my advice and "self-implement" my recommendations. I provide you with the asset allocation blueprint and ETF selections and you take the investment plan and pull the trigger yourself at the brokerage firm of your choice.

This is a good option for some people but not for everyone. If you go this route, I cannot help you with the mechanical implementation of your investment plan. And while investing in ETFs is not rocket science, there are many details which can potentially trip you up.

Here is a partial of list of considerations before choosing a DIY portfolio implementation:

  • Do you have the time, inclination, desire, confidence, and competency to execute and maintain a portfolio strategy? If "yes," continue reading to make sure.
  • Are you aware of the pitfalls and particulars of mixing ETFs and mutual funds (or moving from one to another)?
  • Do you know the difference between a market order and a limit order and when to use each?
  • Do you know what time of day is best and worst to place ETF trades?
  • Do you know the liquidity (average volume, bid/ask spread) of the ETFs you will invest in and how this may affect placing trades?
  • When investing additional funds or making withdrawals, do you know how to calculate how much of each fund to buy and sell?
  • Do you know what it means to "overbuy an IRA" and how to prevent it from happening?
  • When withdrawing funds, do you know which account to pull money from?
  • When selling funds in a non-IRA account, do you know what tax basis method to use and how to minimize your taxable gains?
  • To maximize your charitable giving tax benefit, do you know which securities to gift and how to ensure your giveaway gain is maximized?
  • Do you know the pros and cons of an "asset location" strategy and if you decide to implement one, do you have the acumen to manage different account "pieces?"
  • Do you know how and do you have the discipline to rebalance your accounts on a set periodic schedule?
  • Do you know what tax loss harvesting is? (and when and how to execute it?)

I am not trying to scare you away; I get paid a fair fee whether you go with a DIY strategy or a delegated managed account strategy. But you should only self-implement if you truly know what you are doing.