How often should you check your statements?

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In today’s digital world you can check your investment statements as frequently as you like.  If you prefer to look every day or even every hour or more, it’s possible.  A lot of firms send out statements frequently with people receiving updates every month or every quarter.  How often should you look though? Do you really need to see that your investment has gained or lost $0.17 today? I think that we are too worried about these fluctuations for the most part, and people have more access to their investments today than they really need. 

 

 

Firstly, it does depend on the time horizon of your investment.  If you are building savings for retirement though, and your retirement is over 5-6 years away for example, the minor daily fluctuations are of little consequence if any.  The point of these investments is to have them be worth more than they were when you invested them.  Of course you hope that on that day of withdrawal they are worth a significant amount more, but to be honest the price between those dates is quite meaningless. Pretend you bought shares in XYZ Corporation with an eye to holding them until retirement.  What does a 3% drop in those shares mean? Realistically if you are waiting another decade to sell them and live off the proceeds its not really useful information, as long as the principles you used to select the investment in the first place remain sound.  I mean sure, it would’ve been advantageous to wait for that 3% drop had you known it was coming, but the game plan for your investment shouldn’t change based on this unless you think the loss will never recover.  Frankly though if a 3% decline makes you question your strategy you shouldn’t have invested in the first place, which leads to my next point.

Investing isn’t about making the perfect call at the perfect time and always being right. In fact what is more important than being right is to avoid being entirely wrong. Maybe you could’ve saved a couple percent on a purchase price and increased your overall return by that much.  Or maybe you could’ve sold those shares for an extra buck or two.  But the price for being completely wrong can be far more impactful!  The most important thing you can do is have a balanced and repeatable process, and try to avoid those glaring mistakes.  Sometimes this is next to impossible for people to do on their own.  That’s an added benefit of a financial advisor because you have someone who can go through things with you without the emotional attachment to the situation.

 

So bearing this in mind, how often should you look at your investments? I don’t think that there is a correct answer really.  I think that psychologically it’s probably closer to once per year though if you are using a trusted advisor.  For example if you have someone who watches the market and keeps an eye on your holdings then other than just being curious its not necessary for you to check things on a daily basis; you’ll probably drive yourself crazy if you do! So, relax, enjoy life and put away some money for your future.  But don't let the minutiae of the markets and investments bog you down.