The Real Risks of DIY Investing

DIY investing has had a good run.

Over the last several years, it’s been difficult to mess up. The market has been strong. Index funds have climbed. Even random stock picks have worked out more often than not. When everything is going up, it’s easy to feel like you’ve cracked the code.

And during your working years? Managing your own investments can absolutely make sense.

But here’s what I see over and over in retirement planning- DIY investing works… until the rules change.

And the rules change as retirement gets closer.

Let’s break down the five biggest risks DIY investors face, particularly as retirement starts getting closer. 

1. Performance Chasing and Hidden Risk

A stock is dominating headlines.
A sector has doubled in a year.
Your neighbor “can’t believe you’re not in it.”

So you buy.

Here’s the problem: what’s climbing the fastest is usually taking the most risk.

When markets are rising, risk feels invisible. The volatility doesn’t show up in your statement, but the gains do! But when markets correct, the same high-flying investments often fall the hardest.

As you approach retirement, avoiding large losses becomes just as important as capturing gains.

In your 30s, you have time to recover.
In your late 50s? Recovery time is shorter. Much shorter.

2. Mistaking a Strong Market for Skill

Bull markets are great for confidence.

Every dip recovers.
Every bold move looks smart.
Every portfolio seems to “work.”

It becomes hard to tell whether your strategy is strong… or whether the market has simply been generous.

Here’s the uncomfortable truth: a rising market can make almost everyone look like a genius.

Retirement is not the stage of life where you want to discover your investment plan only worked when everything was going up.

That’s not strategy. That’s momentum.

3. Too Much in One Basket

This one sneaks up on people.

Maybe you bought tech years ago and it’s done incredibly well.
Maybe one company kept growing and now it’s a large portion of your portfolio.

It feels fine, because it’s working.

But concentration risk is like building your house on one support beam. As long as that beam holds, everything looks stable. If it cracks, the entire house will feel it.

Proper diversification isn’t about limiting growth.
It’s about protecting your retirement from a single unexpected event.

4. Letting Headlines Drive Investment Decisions

Markets move daily.
Headlines are dramatic.
Social media is loud.

When you’re managing everything yourself, there’s no buffer between you and emotional decisions.

Selling during downturns.
Buying when markets are overheated.
Making moves based on fear or excitement.

Emotion can be expensive.

Long-term investing success typically comes from discipline and structure, not reacting to every news cycle. A retirement investment strategy needs guardrails. Without them, it’s easy to drift.

5. Ignoring Tax Planning in Retirement

This is the quiet risk.

Most DIY investors focus on performance:
“How much did I make?”

Fewer focus on the more important question:
“How much did I keep?”

Tax coordination becomes critical as retirement approaches.

Selling in the wrong account.
Triggering unnecessary capital gains.
Holding tax-inefficient investments in taxable accounts.

Over time, taxes quietly erode returns.

In retirement, poor tax planning can also impact:

• How much of your Social Security is taxable
• Your Medicare premiums (IRMAA adjustments)
• Required Minimum Distributions (RMDs)
• How long your retirement income lasts

Investment management and tax strategy should work together. For many DIY investors, they don’t.

And that disconnect becomes expensive.

DIY Investing During Working Years vs. Pre-Retirement

During your accumulation years, DIY investing can work very well.

You’re contributing consistently.
You’re decades away from retirement.
You can ride out market downturns.
Time is your biggest advantage.

If the market drops, you just put more in.
If you make a mistake, you adjust.

But as you move into your late 50s and 60s, the goal shifts.

You’re no longer just building wealth.
You’re preparing to live off of it.

That’s a completely different skill set.

Retirement planning is not just about picking solid investments. It involves retirement income planning, withdrawal sequencing, tax- efficient distribution strategies, and risk management.

Accumulating wealth and distributing wealth are two different disciplines.

You can be a very capable investor and still benefit from a structured retirement income strategy. Once the paycheck stops, the margin for error becomes much smaller.

When Is It Time to Move From Investing to Planning?

If you’re in your 30s or 40s and steadily investing, DIY may work just fine.

But if you’re approaching retirement you need to ask yourself-

• Are you taking too much risk?
• Is your portfolio positioned correctly?
• Are your withdrawals tax-efficent?
• Will your portfolio hold up in a downturn?
• Will it create a reliable retirement income?
• Do you need a second opinion?

It may be time to shift from simply investing to comprehensive retirement planning.

There’s a big difference between hoping your portfolio work sand knowing it’s structured to support the next 20–30 years of your life. And that difference often determines whether retirement feels uncertain or confident.

Final Thoughts

DIY investing isn’t wrong.

It’s just incomplete once retirement gets close.

Markets will always go through cycles.
Risk will always exist.
Taxes will always matter.

The question isn’t whether you’ve done well so far.

The real question is:
Is your strategy built for the stage of life you’re entering next?

_{Investment advisory services are offered through Fusion Capital Management, an SEC registered investment advisor. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.}