When I started investing regularly when I got my first job out of college at age 21, I was checking the progress of my investment accounts at least 3-4 times a week. I wasn’t going to do anything drastic based on what I saw, especially not at a time when I was only investing two or three hundred dollars a month.
Eventually I started looking less and less, but I also started to read more about the markets and keep up with the economic news.
There’s something very addicting about investing. Maybe it’s because investing sometimes feels like gambling and it can be very stressful. The markets are at times unpredictable, and it’s almost impossible to know when to sell and when to buy. Just like we like to be in control of our daily finances and our monthly budget, we want to keep tabs on our investments. But is checking constantly healthy?
There is no one-size fits all solution, but there are certain rules we can follow that will help us learn what works best for us as individuals. Some people can handle large swings in their balances on a weekly basis, while others can’t think about losing 10% of their account balances without crying a little bit.
Retirement investment accounts are typically long-term investments. Looking at the balances and performance each day is definitely overkill, as it often leads to stress and worry. We tend to look at the ups as normal and the downs as unexpected, so when the market is not doing well, it makes us cringe and think of ways to change things. We get emotional, and this often leads to making misguided investments.
The most important thing to do is to create a plan in advance. It doesn’t have to be a super rigid plan because things change, but having something written that documents what we are trying to achieve with an account can help us stay on track when our investments stray the 10% per year gains that we hope for.
My recommendation is to look at index funds once or twice a month, especially if there are no plans to make any changes. It’s always good to keep up-to-date on the world and investing news, but looking at your individual balances too often could lead to snap judgments and knee-jerk reactions.
For investing that is medium-term (a horizon of less than 5 years), since we’re going to be using that money sooner, checking on it more often may not be a bad idea. Keeping tabs on money that’s important to us is helpful because it can help limit losses to what we can afford. I check my Lending Club account every so often to check on the performance, but also because I have funds to reinvest from when loans are paid back.
For example, if we’re saving for a house in 5 years, investing in the stock market could be a good idea if we were to get average returns. But losing a lot of money would be bad, so checking every week or two might be smart to make sure the balance is at a comfortable level for you.
With fun money (anything that is not designated for a specific goal and you can afford to lose in a worst-case scenario), there really are no rules. While it may not be good for your mental health to check on your accounts each day, go ahead and check as much as your heart can handle.
I think the most important thing to keep in mind is that whatever timeline you choose, make it one that fits into your schedule but one that won’t tempt you to make changes based on the balance and one that won’t stress you out. Going into investments, we know the best and worst-case scenarios. By creating a plan beforehand, there will be an exit strategy in place whether it means selling when we’re up 30% or cutting our losses when we’re down 20%.
Readers, how often do you check your investments? How did you settle on the time between checking?