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How Often Should You Check on Your Investments?

How Often Should You Check on Your Investments?

January 17, 2020

Typically, the further away you are from requiring funds, the less you need to pay attention to them. This is particularly true of long-term retirement assets in tax-advantaged funds like 403(b)s and Roth IRAs.

Investors who remain hyper-focused on the market's movements are succumbing to a bad, and sometimes dangerous, habit.

The Danger of Emotional Investing

Emotional investing is when a person invests based on feelings of fear or greed, etc. This can be exasperating for the kind of person who panics when the market is going down. Emotional investors are typically better off checking statements less often. This helps to avoid making financial decisions out of fear, which typically leads to poor performance.

"There is ample evidence from the field of behavioral finance suggesting that people tend to react to markets in a way that lowers returns," said Michael Liersch. Liersch holds a Ph.D. in cognitive psychology and is the global head of wealth planning and advice at J.P. Morgan Asset Management.

These reactions create a destructive pattern...

This chart shows how human emotions affect their investing decisions—begin at a neutral state, head up to exuberance (when we buy), down to anxiety (when we sell), and continue through the same cycle again.[1]


Stay in Control by Building Good Habits

Just as you maintain control in your daily life by exercising good habits, the same holds true for investing. If you're just starting to invest, or if you're trying to figure out how frequently to check your accounts, here are some key questions and answers:

  • How soon are you planning to use the funds? The shorter the time frame, the more frequently you should check your funds.
  • How well can you handle big market swings? If you know seeing red arrows is going to send you into a panic, check your funds less frequently.

Addressing these questions can give you peace of mind, which leads to better decision making and ultimately more control over your wealth.

Your Turning Pointe Financial Advisor is here to help you form good financial habits. Connect with us to create a plan. Cheers to a bright future!

[1] J.P. Morgan Asset Management, “The Power of Intent”; March 2019.