When you live in a country that has do-it-yourself shows all over cable TV, you can't help but feel guilty hiring a professional to do work around your house. We're not here to offer advice on home projects, but if you've ever wondered if you should do it yourself when it comes to your finances, read on. We examine the pros and cons of managing your retirement portfolio without a financial adviser, selling your house without a real-estate agent, writing your will without a lawyer, and doing your taxes without a tax pro.


Manage your own investments?

To be your own money manager, you'll need to figure out how much investment risk you can stomach, allocate your assets accordingly, and rebalance your portfolio periodically. After you retire, you'll have to generate income from your stockpile while minimizing taxes and making sure that your money lasts as long as you do. Though the job can sound daunting, most of us try to do it on our own. Only 43 percent of Americans surveyed for the Employee Benefit Research Institute's 2006 Retirement Confidence Survey said they had ever used a financial adviser. If you're pondering whether you should seek professional help or DIY, here are key points to consider.

Potential savings. How much you'll spend on a financial pro will depend on what type of advice you need and whether you want it on an ongoing basis. The most expensive option is hiring a financial adviser to manage your portfolio. Annual fees typically range from 0.5 to 1.5 percent of the assets under management, with most money managers charging around 1 percent. So if your nest egg is worth $500,000, for example, you might spend a stiff $5,000 a year on fees. Plus, any mutual funds that your adviser recommends carry their own costs.

You can outsource the job at lower cost by investing in a target-retirement mutual fund, either through your 401(k) plan at work or directly through fund giants like Fidelity, T. Rowe Price, or Vanguard. You pick the fund that matches the year you expect to retire. The fund's managers then do the rest, allocating assets between stocks and bonds, becoming increasingly conservative as the target date approaches. Annual expense ratios vary from more than 1 percent to just 0.21 percent for Vanguard's funds.

Between those approaches is a middle ground. You can use an adviser to help you develop a financial plan, then monitor and rebalance your portfolio yourself once a year or so. You might pay hourly fees, a flat rate, or nothing to consult with an adviser. Look for freebies at financial firms that want to get or keep you as a customer. For example, Vanguard offers a free retirement financial plan to clients who have at least $250,000 invested at the company and to new customers investing at least $100,000. If you've invested $250,000 or more, you'll also get a free annual checkup.

When you reach age 70½ and must begin to withdraw money from your retirement accounts, many financial institutions will calculate those required annual minimum distributions for you. If you want to check their math, follow the directions in IRS Publication 590, available online at www.irs.gov.

Likely DIY candidates. If you have the time and some interest in investing, you can skip the high-priced asset managers and the one-size-fits-all target-retirement funds. To learn more, check out the Securities and Exchange Commission's "Beginner's Guide to Asset Allocation, Diversification, and Rebalancing," which is available online at www.sec.gov/investor/pubs/assetallocation.htm.

Torture quotient. Be warned: You may become a retirement-calculator junkie. You can spend hours playing with online tools like T. Rowe Price's Retirement Income Calculator (www3.troweprice.com/ric/RIC). However, if you do it yourself with help from a financial planner, you can leave the number crunching to the pro.

The bottom line. When it comes to managing your retirement money, you don't have to choose between doing it all yourself and doing nothing yourself. Instead, you can manage your own money while following a plan that you get free from a financial adviser.


Sell your own home?

Only 12 percent of home sellers last year did not use a real-estate agent, says the National Association of Realtors. Moreover, 40 percent of that group sold their properties to family members or acquaintances. Here's what to consider when choosing between hiring an agent and going the FSBO (For Sale by Owner) route.

Potential savings. They're fat enough to make you salivate. Although agents' commissions are negotiable, sellers traditionally pay 6 percent of the price their house fetches. Half of the commission goes to the listing agent, and the other half to the agent who brings the buyer. If your house sells for $300,000, you'll have to fork over $18,000 at closing. DIY and you've got $18,000 in your bank account. Of course, you won't save the entire $18,000--you'll have to spend money to advertise your home in local newspapers and perhaps on national Web sites like www.owners.com or www.fsbo.com, where a nine-month listing starts at $69.95.

Likely DIY candidates. To sell your home on your own, you have to take on all of a real-estate agent's responsibilities. First you'll have to determine a price for your home. Real-estate agents usually set a home's price after analyzing sales of comparable houses nearby. You can find recent sales data for your area by using the "What's Your Home Worth" tool on NAR's Web site (www.realtor.com). You'll also have to write and place ads for your home in local newspapers and online, then be available whenever potential buyers call or visit. You'll need patience to deal with lookers who aren't serious buyers. If someone makes an offer, you'll have to negotiate a price and contract terms. To close the deal, you'll have to complete all the paperwork your state requires.

Torture quotient. Attracting potential buyers can be a challenge. That's because real-estate agents share listings with each other on the Multiple Listing Service for their area. Only agencies that belong to the local MLS can use it.

Some agencies will meet you halfway and list your home on your local MLS for a flat fee of several hundred dollars. For example, HomeWise Real Estate Services in Columbus, Ohio, belongs to a group of flat-fee brokers at BrokerDirectMLS.com. HomeWise can list your house on the local MLS in more than half of Ohio's counties. The agency's lowest-price plan, which costs $399, buys a six-month listing with one photograph of your home on your local MLS as well as on www.realtor.com. HomeWise also gives you a For Sale sign, but you must negotiate with buyers and close the deal yourself. In addition, you'll pay a commission to the real-estate agent who brings you a buyer.

The bottom line. If you're up to the task, there's no harm in attempting to sell on your own. The best time to try is when your local real-estate market is teeming with buyers and short on sellers. It also helps if your home is especially desirable and located in a prime neighborhood. If that's the case, you might be able to sell it simply by advertising in your local newspaper. But if you don't attract any prospects after a week or two, you may want to reconsider and hire an agent to list your house on the MLS.


Write your own will?

Most Americans who have wills used attorneys to prepare them, according to the National Association of Estate Planners & Councils. Here's how to decide if you should follow their lead or do it yourself.

Potential savings. When you see a lawyer to draw up a will, you'll generally get an estate-planning package that also includes a durable power of attorney and health-care directives. With a durable power of attorney, you name a trusted person to make legal and financial decisions for you should you become incapacitated. Laws vary by state, but health-care directives usually include a living will and a durable health-care power of attorney. A living will lists medical care that you do or don't want under certain circumstances. In a durable health-care power of attorney, you name someone to ensure that the wishes you set down in your living will are carried out.

Some lawyers charge a flat rate for an estate-planning package; others bill by the hour. Fees vary geographically and with the complexity of the estate. Expect to pay about $750 to $3,500. You should review your documents and consider making changes whenever the estate-tax laws or your family situation changes.

In theory, you can write your own will without spending a dime. In some states you can even create a holographic (or handwritten) will by scribbling your wishes on, say, the back of an envelope. But if you don't follow your state's legal requirements, one of your survivors might contest your will in court and a judge might invalidate it. If you live in California, Maine, Michigan, or Wisconsin, another free option is to fill in a statutory will form. However, such documents are inflexible and might not meet your needs.

A low-cost option is to get a software program like Quicken WillMaker Plus 2007 ($49.99). CR Money Adviser tested WillMaker in October 2004 and found it easy to use. However, an estate-planning attorney who examined the will that we produced found several omissions. He recommended a more thorough estate plan because the staffer who used the program had most of her assets in retirement plans and other investments that wouldn't pass to her heirs through the will.

Likely DIY candidates. Nolo Press, publisher of WillMaker, says you can write your own basic will if you're under age 50, in good health, and don't expect to owe estate tax. Under current law, the portion of your estate that escapes federal estate taxes is now $2 million and will rise to $3.5 million in 2009. The estate tax will disappear in 2010 but return the following year with a $1 million exemption. Some states that levy estate taxes have lower thresholds. Don't attempt to write your own will if you own a business or if you need to provide for a disabled child. Consult a lawyer if you have been married more than once and have children from a previous marriage.

Torture quotient. Using WillMaker, it took our tester just 30 minutes to write a will. Filling out a statutory will form is no sweat, either. California's six-page form, for instance, requires you to make choices regarding just eight provisions. You'll also need two witnesses to sign the document in your and each other's presence.

The bottom line. Only people with uncomplicated lives and modest assets should even consider doing their own estate planning. Those same folks would pay a lawyer just a few hundred dollars for a basic estate plan, so the savings might not make up for a possible mistake.


Do your own taxes?

Many Americans don't; 62 percent paid someone else to fill out their tax returns last year. That's despite the fact that about two-thirds of all filers take the standard deduction. To decide if you should do it yourself, weigh the money you'll save against the time you'll expend.

Potential savings. They will vary, depending on the type of preparer you would otherwise hire and how complicated your returns are. H&R Block says that its average customer with a basic return paid about $150 in 2005. Enrolled agents, who are federally licensed, usually charge more than the tax-prep chains but about the same or less than certified public accountants, who command $100 to more than $300 an hour. Both EAs and CPAs can represent you before the IRS in an audit.

To do your own taxes at no cost, you'll probably have to fill out a paper return. If you have questions, you can call the IRS at 800-TAX-1040, search www.irs.gov, or visit one of its Taxpayer Assistance Centers (find one near you on the IRS Web site). If your adjusted gross income was $52,000 or less in 2006, you can file your federal return online free through the IRS.

A modest step up in cost is to do your return using tax-prep software. For example, TurboTax Federal + State Deluxe Deduction Maximizer 2006 is $44.95, and H&R Block TaxCut 2006 Premium Federal + State Deluxe is $29.95. We recently tested both programs (March 2007) and found that they worked well on simple returns involving the standard deduction or uncomplicated, itemized deductions like home-mortgage interest.

Likely DIY candidates. If you work for a salary and take the standard deduction or a few itemized deductions, you can probably file your own returns. If you want tax-trimming tips, you can consult reference books that are published yearly, like "J. K. Lasser's Your Income Tax" ($17.95).

Torture quotient. The IRS estimates that taxpayers spend 11 to 52 hours preparing their federal returns. Even if you use a paid tax preparer, you still have to keep records to give to him or her, a task that takes 5 to 37 hours, the IRS says.

The bottom line. Software makes it relatively painless for even math-phobic folks with straightforward tax situations to prepare their returns. If you don't have the patience to spend the time at your computer, you might prefer to hire a pro to do the job. Or you can pay a tax preparer one year, then do it yourself with software the next, assuming that your income and deductions are similar. If the results are comparable, you might feel comfortable enough to continue doing your own taxes unless your financial situation changes.