It's never been easier to check your investment portfolio. You can do it in a matter of minutes online, and many brokers also offer stock trading apps that let you review your account from your phone.
As a general rule, it's good to stay on top of your finances. But when it comes to brokerage accounts, there is such a thing as checking in too often, and it can have some serious negative drawbacks. Here's what can happen and how much checking in is too much.
You're more likely to be stressed about losses
The stock market is volatile, so it goes up and down from day to day. The more you check your portfolio, the more you'll notice those gains and losses. You might think that since there will be good days and bad days, it evens out, but that's actually not the case.
Studies have found evidence of a behavioral trait known as loss aversion. This refers to how people are more sensitive to losses than to gains, even of equal amounts. So, you'll likely feel more stress on days when your investments are down and comparatively less relief on days when they're up.
Nobody likes seeing that they've lost money, even if it's just a temporary loss on your investments. For your mental health, you're better off not checking your portfolio all the time. After all, it stands to reason that you're going to see far more down days if you're checking every day compared to once every three months.
It could lead to poor investment decisions
Seeing more of your portfolio's bad days isn't just demoralizing. It can also negatively impact your decision making. Investors with loss aversion sometimes become less willing to accept risk and shift to more conservative investments. A 1997 study on loss aversion found that:
"The investors who got the most frequent feedback (and thus the most information) took the least risk and earned the least money."
Although conservative investments may seem reasonable, they severely limit your portfolio's growth potential. The stock market is more volatile from year to year, but it also has an average historical return of 10% per year before inflation. That's far greater than more conservative investments, such as bonds.
You're wasting your time
Last but not least, there's not a whole lot to see from your investments on a daily basis. They're probably not going to skyrocket in value overnight, nor is the market going to completely collapse.
If you have your money in quality stocks or investment funds, they'll likely gain and lose a few percent here and there. That only matters if you're planning to buy and sell frequently, but this type of investing generally isn't recommended. The most reliable option is long-term investing, where you make good investments and hold them for five years or longer.
How often should you check your investments?
As a rule of thumb, check your investments every one to six months. Anywhere within that time frame will keep you up to date on your portfolio, without causing unnecessary stress. Some investors go with once per quarter as a happy medium.
Everybody has their own preferences, so if you want to check more or less often, it's not necessarily an issue. What's important is that no matter how often you check in, you don't make any knee-jerk decisions, such as panic selling because of a temporary price drop.
FAQs
Frequent monitoring can lead to emotional reactions to short-term market fluctuations. This emotional response may prompt impulsive decisions that could harm your long-term investment strategy. Investors tend to experience the pain of losses more acutely than the joy of gains.
What happens when you check your brokerage account too often? ›
When you constantly check your brokerage account, you risk getting stressed out by on-screen losses. Those losses could lead you to sell stocks at a terrible time. A better bet is to check your account once every quarter, and at some point toward the end of the year.
How often should you check on your investments? ›
How often should you check your investments? Assuming that you're investing for the long-term, there's no need to check your stocks more than once a month to once a quarter. Checking stocks too often can lead to knee-jerk reactions.
Why you shouldn't check your stocks everyday? ›
It May Encourage You To Trade
By looking at your portfolio, you will be tempted to trade on a whim. That can increase your costs and, potentially, your taxes too, since often holding stocks for less than a year can increase the tax hit from capital gains.
What are the 3 investing mistakes? ›
The worst mistakes are failing to set up a long-term plan, allowing emotion and fear to influence your decisions, and not diversifying a portfolio.
Is it safe to keep more than $500000 in a brokerage account? ›
They must also have a certain amount of liquidity on hand, thus allowing them to cover funds in these cases. What this means is that even if you have more than $500,000 in one brokerage account, chances are high that you won't lose any of your money even if the broker is forced into liquidation.
How often should you look at your brokerage account? ›
Generally, it's a good idea to check your investment account around every six months to a year. This may seem like a long time, but there are good reasons for it. The biggest reason not to follow the performance of your account too closely is that doing so can lead you to make decisions that cost you.
What is the 90 10 rule in investing? ›
The easiest way to do it is with the 90/10 rule. It goes like this: 90% of your contributions go to safe, boring investments like low-cost total stock market index funds. The remaining 10% is yours to play with.
What is the 75 25 rule in investing? ›
It means you use 75% of your income for your day-to-day bills and needs, and put 25% into savings or investments.
What is the 20 rule in investing? ›
Yes, the 50-30-20 rule can be used to save for long-term goals. Allocate a portion of the 20% to savings or the 30% for wants specifically to your long-term goals. These might include a down payment on a house, education funds, or investments. The rule is meant to bring focus to savings.
All it takes is two simple steps:
- Pick a low-cost, diversified index fund. These funds that invest your money across the whole market, so you don't need to worry about picking the “best” stock.
- Automate your investing so you do it consistently. That way you can stop chasing stocks and relying on guesswork.
One of the main benefits of a long-term investment approach is money. Keeping your stocks in your portfolio longer is more cost-effective than regular buying and selling because the longer you hold your investments, the fewer fees you have to pay.
How often should stock be checked? ›
It's good to check in at least once a week on how your stocks are doing. And if you're going on vacation for a couple of weeks (especially during the July/August earnings season), you should leave specific instructions with your broker (online or otherwise) about how to handle big movements.
What are the two riskiest investments? ›
While the product names and descriptions can often change, examples of high-risk investments include: Cryptoassets (also known as cryptos) Mini-bonds (sometimes called high interest return bonds) Land banking.
What are the three C's in investing? ›
As far too many investors have found out the hard way, investing mistakes can be quite costly! When looking at potential options on who you can trust to invest your money without making mistakes, consider each of the 3 “C”s: Cost, Conflicts, and Competence.
What is the number one rule of investing? ›
Rule No.
1 is never lose money. Rule No. 2 is never forget Rule No. 1.” The Oracle of Omaha's advice stresses the importance of avoiding loss in your portfolio.
How often should I check my trading account? ›
It's good to check in at least once a week on how your stocks are doing. And if you're going on vacation for a couple of weeks (especially during the July/August earnings season), you should leave specific instructions with your broker (online or otherwise) about how to handle big movements.
What happens if your brokerage account goes negative? ›
When you have a negative balance, the broker asks you to deposit more money. If you don't comply, the broker can take action to collect the money you owe them.
Can a brokerage account lose money? ›
You can lose more funds than you deposit in the margin account. A decline in the value of securities purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account.
Is it bad to have too many brokerage accounts? ›
While there are advantages to having accounts at multiple brokerage firms, managing these accounts responsibly and staying organized is essential. Tracking investments and monitoring your portfolio's performance becomes more challenging when dealing with multiple platforms.
