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How Often Should You Check Your Investments?
With everything accessible at our fingertips nowadays, looking at your portfolio multiple times a day can be tempting. But does that really do you any good? Conversely, you don’t want to ignore your investments and miss something crucial.
As you’ve probably heard at some point, moderation is key. You can apply the importance of finding a balance to most things in life, and that includes checking your investments.
So how often should you be tuning in? The answer might surprise you. Let’s explore several factors determining the attention level your investments need.
Factors to Consider When Checking Your Investments
Many things can influence the frequency with which you check your investments. But sometimes, people overestimate its importance. Let’s look at some of the reasons you should be checking in more or less.
#1. Trading Style
Your trading style will heavily affect how often you need to look at your investments. Long-term investors don’t need to stay nearly as vigilant as active traders. In reality, most people invest passively but fall into the trap of regularly checking their portfolio when they don’t need to.
#2. Type of Securities
Are you heavily invested in mutual funds and real estate? You may only need to check on things every three to six months. If you’re more invested in stocks or volatile securities like IPOs, you might want to watch more closely.
#3. Market Trends
If you’re invested in a sector influenced by market trends, you’ll likely be keeping an ear to the ground and babysitting your investments.
#4. Risk Tolerance
An investor’s risk tolerance can affect how often they check their investments. Someone with a high-risk tolerance may be involved in more securities that demand their attention, like volatile stocks or cryptocurrencies.
On the other hand, someone with a low-risk tolerance will be more invested in “safer” assets like US Savings Bonds or Money Market Funds.
#5. Personal Goals
Your personal goals are a significant factor as well. If you’re looking to invest a large sum of money and make a quick turnaround, you’ll need to be aware and focused on market activity. If your goals are long-term, then you’ll be a passive investor and can take a much more laid-back approach.
The Risk of Checking Your Investments Constantly
There’s an appropriate amount of time you should spend checking your investments, but people tend to exceed it. Although it may seem harmless, it can negatively impact your mental and financial well-being.
Checking your investments all the time can become an obsession, one that can cause you to make rash decisions. Emotions take over logic more than we care to admit, and making an emotional choice with your finances can lead to a regrettable outcome.
We’ve all logged in and seen one of our stocks plummet. It’s common to have a knee-jerk reaction and want to pull out when it’s sometimes better to do some research first. Markets fluctuate, and it’s easy to get caught up in the moment when you should focus on the bigger picture.
That is especially true for long-term investors. You don’t want to let split-second decisions affect your future. As tempting as it may be to do frequent checkups, it’s better to tune out a little if you have long-term goals.
Frequency of Checking Investments for Different Types of Investors
So what does a healthy relationship with your investments look like? It depends a lot on what type of investor you are. Let’s discuss some of the most common investors and how often they should check their investments based on their goals and strategies.
It’s safe to assume that beginners are not jumping right into day trading. However, their risk tolerance can still influence their strategy.
New investors are commonly starting with a small amount and looking to build a long-term plan. If you’re a beginner, you might not need to check that much unless you aim to learn more and explore the tools available, like an investment management software such as StockMarketEye.
But investing isn’t one size fits all. If a beginner has an expendable amount of money and is comfortable taking a risk, their chosen strategy could be all over the place. They may check on everything frequently as they dabble with new companies or IPOs or buy an ETF and treat it like a savings account they never touch.
Passive investors have a low-risk tolerance and the long haul in mind. Their goal is to maximize their returns and minimize the amount of trading they have to do, so the type of securities they invest in will reflect that.
If you’re the type that likes to set it and forget it, this type of investing will match your style. You won’t need to check your investments constantly; in fact, it’s better if you don’t. Passive investors might only check in every six months to a year.
Active trading is the strategy of buying and selling securities based on market fluctuations in an attempt to make a faster profit. It demands a very hands-on approach and is better suited for those with a high-risk tolerance.
This type of trading isn’t for the faint of heart. Active traders have to monitor the market and be ready to make moves at the drop of a hat. Depending on their style, they may work options contracts and check in multiple times a week or day.
The main goals of retirees are to ensure their investment plan is still working for them and that their assets are in the right place. They might need to reallocate assets if they are getting closer to their time horizon.
Retirees may want to make adjustments here and there, but overall, they’ve already put in much of the legwork. They might only need to check their portfolio about once a year if everything is settled where it should be.
Always Remember Your Investment Goals
How often you look at your investments should depend on your strategy, and choosing one that aligns with your goals and risk tolerance is crucial. While monitoring your investments is good, you might need to check in less than you think.
We encourage you to seek professional advice when making investment decisions and always keep your goals in mind. Don’t let short-term market fluctuations influence your long-term plan.