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The Dangers of DIY

Posted on: by Madeleine Sunley

DIY is all well and good and providing you know one end of a hammer from the other and aren’t the sort of person who always manages to drill through a water pipe, you’ll probably save yourself a fair old bit of money. However, it’s probably true to say, there are those amongst us who provoke instant horror and sheer panic in the family ranks, when they announce they’re going to ‘do it themselves’. It’s those individuals, in the interests of harmony on the home-front, who are probably best advised to think about calling in a professional.

Botched DIY in the home can be costly, not to mention heavy on the stress, but so can relying on your own financial knowledge when it comes to investing your hard earned cash. It’s always worth investigating just how much you might be missing by doing things yourself as opposed to using a professional.

To illustrate:

  • If you’re not using all your allowances because you don’t know about them or don’t fully understand them, you’ll end up over-paying on capital gains and income tax. That’s less money for you and more for HMRC – the sort of thing that makes them rub their hands with glee.

  • If you’re organising your own investment portfolio, you may have opted for expensive investments that are not giving you the proportionately greater return you should be receiving. Again, less money for you, although more for the fund managers.

  • Another point is that you may not have chosen investments that are right for your own individual attitude to risk. Should this be the case, you could find a fall in the stock market means a greater loss for than you were expecting and more than you wanted to risk.

  • Without a detailed awareness of exactly what you’re investing your money in, you can be caught short with a market crash and may not have anticipated the impact on your investment because possibly you hadn’t appreciated you were investing in stocks and shares with all their intrinsic risks.

You might find this recent, excellent article from Matthew Stephens, a tax specialist at Prudential, of some interest.