How Often Should You Check Your Investment Accounts?
Saving and investing over time is important to building wealth, but checking your accounts regularly can be detrimental to your strategy. Not only can it be stressful to see your investment account balances fluctuate with the market, but seeing those ups and downs can also make you feel pressured to take your money out of the market.
It is important for investors to constantly rebalance their portfolios so that those portfolios are well diversified, but you should avoid constantly dragging your investment plan. Here’s the science behind why checking your investments too often can lead to bad decisions, and how often it does it makes sense to update your portfolio.
Why you shouldn’t check your portfolio more often
Behavioral finance experts say that investors sometimes suffer from a loss bias, which means they have a stronger emotional response to losses than to gains. If you invest for a long time, you may not feel the ability to react emotionally to your best valuations in the long run as you will see red the day the market goes down.
Loss aversion may cause you to check your portfolio more often when the stock market goes down. And research shows that investors are more willing to take investment risks when they test their portfolios less. Researchers have found that investors who get the most feedback from their portfolios take less risk and earn less money.
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How often should you check your investment portfolio
Financial advisors often recommend that investors review their investment portfolio once a month or once a quarter. This doesn’t necessarily mean you should – or should – make changes to your portfolio. Instead, you can check if there were any surprising changes.
But you should rebalance your portfolio regularly. This includes selling assets that have become so valuable that they take up a higher percentage of your portfolio than your strategy needs, and using that money to buy assets that don’t take up enough space in your portfolio. How often you should measure will depend on your financial situation, but some advisors recommend once a quarter, or once or twice a year.
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How to avoid checking your portfolio too often
To avoid checking your investment portfolio too often, create a routine that makes sense to you and set a reminder to review your portfolio. Ideally, you will not check your portfolio outside of these times.
You can also turn off non-essential banking and investment notifications so you’re not reminded of your accounts too often, and remove the app from your phone to check your portfolio at scheduled times on your computer.
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And when checking your balance, start with long-term performance instead of looking at short-term price movements. It can be stressful to see your portfolio drop 10% in one day, but when you step back and see that your balance has grown over time, it can make that adjustment manageable.
