How often do you check your investment portfolio accounts? It turns out that managing your investments doesn't need to be done daily - and here's why.
Technology can be a great thing. For example, there’s nothing better than quickly logging on to your investment portfolio accounts online to see the amazing growth that’s accrued.
Except when it doesn't.
The reality is that planning an overarching investment strategy for retirement is a marathon that requires research and effort—and a little faith—for the long haul. Checking your portfolio for changes every day might seem like an easy way to stay on top of your overall progress, but really, it could be setting you back. Here’s why.
1. Market Fluctuations (Both Up and Down) Are Normal
When it comes to the stock market, there are good days and bad, ups and downs, gains and losses … and all of this is perfectly normal. The reason that most experts recommend investing in the stock market for your retirement goals is that, historically, the rates of returns tend to be pretty good, and definitely better than what you’re likely to find through any other savings vehicle. When you frequently check your portfolio, though, it may not always feel that way. That's because this assessment takes into account the ebbs and flows of the market, which might be hard for you, the investor, to do on a daily basis when you log in and see losses. In other words, keeping the faith is easier if you don’t make a daily habit of following your progress.
2. Temptation to Make a Poor Money Move
There's a reason most people tend to let financial advisors handle the execution of their portfolio decisions. Unless you’re an expert, day trading isn’t something that should be taken lightly. Without much knowledge of how a stock has performed historically, someone checking their portfolio daily could be tempted to sell or buy based on a whim, but these types of moves aren’t effective when it comes to the long-play for your overall financial growth.
3. You Could Question Your Overall Strategy
Putting together a solid portfolio often involves a lot of thought regarding a number of factors. The things that you and your advisor might consider before deciding where to place your money might include your current age and the age you plan to retire, your investment tolerance and how much you earn, as well as what your plans are for retirement, among other things. Checking your portfolio every day may cause you to question your entire (well-planned) strategy, especially if the market is having a tough couple of months—or even year. Have faith in the fact that all the effort you and your advisor, if you use one, put into building your portfolio in the first place will get you where you need to be when the time comes.
4. There's No Real End Game
Checking your portfolio online frequently is often a zero-sum game. Even if you don’t plan to make any actual changes when you check your portfolio every day, then at most what you’re doing is watching idly from the sidelines. Watching the moves within your portfolio every day can be exhausting, frustrating and futile. Put that time to better use and instead, make a goal to check in with your financial advisor every few months throughout the year to gauge how your portfolio is growing. Then, plan to make any big changes at the beginning of each year as necessary to stay the course for your strategic overall growth.
Checking your retirement portfolio every day might seem like a great way to stay active in your financial future, but more likely than not it will just be an unnecessary roller coaster that could even lead to poor financial choices. The better overall plan is to create a solid retirement strategy that takes into account your overall financial picture and retirement goals, check in periodically throughout the year, and plan to adjust it once a year if necessary. A Fifth Third financial advisor can help you if you aren’t sure how to get started creating the perfect retirement roadmap to get you to your future goals.