Context & Problem

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First of all, let’s examine where share investment fits into a wealth management program. We believe that property is the way to wealth and that superannuation is the way to retirement; and that share investment is best considered an active savings contingency. That’s because it’s hard to beat the leverage for growth that is implicit with property investment or the tax effectiveness of super. Not having either of these advantages makes it hard for shares to keep up. But done efficiently, shares can make a significant contribution to a solid wealth program and provide ready liquidity (cash from selling) as a contingency to shore up cash flow problems. So how best to go about share investment.

DIY (do it yourself) share investing gives you control—but it also gives you responsibility. Picking individual shares sounds exciting, especially when media stories highlight incredible wins. But the failures are far more common and rarely make headlines.

Many people treat share investing like gambling. They chase tips, follow fads, and act out of fear or greed. Without proper research, diversification, and risk management, the odds are stacked
against consistent success

Here’s what it really takes to be a successful DIY investor:

• Diversification: You need at least15–20quality companies across sectors and geographies to reduce risk.
• Research: Analysing financials, industry trends, and company strategy isn’t something you can skim in a newsletter.
• Discipline: It’s easy to buy a stock. The hard part is knowing when to sell—and resisting panic or hype.
• Time: Monitoring markets, rebalancing your portfolio, and staying up to date takes ongoing effort.

Even if you put in the work, outperformance is rare. Beating the market usually involves taking concentrated risks—which means bigger up sand downs.

If you still want to go it alone, consider focusing on thematic ETFs instead of individual shares. These are bundled investments that follow a theme (like clean energy or tech) and are diversified across many companies. For a solid base, look for:

• Australian broad market ETFs (e.g. covering the ASX 200)
• Global ETFs (e.g. MSCI World Index exposure
• Sector ETFs (e.g. healthcare, infrastructure)

This gives you instant diversification, typically lower fees, and easier rebalancing.

On the other hand, professionally managed funds—whether active or passive—may suit investors who prefer a hands-off approach. But as the SPIVA report shows, professionals cannot beat market indexes while the alternative way to invest via index funds has very low fees. So why pay a professional manager when a low-cost index will do just as well. You typically pay a small annual fee, and in return, you get:

• Built-in diversification
• Low fees
• Access to a wide range of markets and sectors

Isn’t DIY investing cheaper than paying a fund?

Sometimes—but not always. Brokerage fees, taxes from frequent trading, and poor decisions can cost more than a simple index fund fee. And don’t forget to factor in the enormous amount of time and energy that applies to DIY. Think of all the better things you could be doing with your time–family, friends, leisure, or even studying to improve your career or working extra time

I subscribed to a stock - picking newsletter — isn’t that enough?

No. Most subscription services fail to beat the market consistently. Following tips without deep understanding is still speculation. And you still have to put in a lot of time to follow recommendations scrupulously; and don’t forget the accounting and tax reports.

Can’t I just pick a few top - performing stocks?

Performance is unpredictable. Concentrated portfolios can soar—or sink. Diversification helps smooth the ride

What if I want control but not the effort?

Consider a core-satellite strategy: use low-cost index ETFs as your core, and add small, carefully selected investments around the edges. At least this way, the wins or losses for your own picks won’t affect the overall result that much.

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