Investing money in a brokerage account could do a lot of great things for your future. Over the past 50 years, the stock market (represented by the S&P 500) has rewarded investors with about an average annual 10% return. So if you invest $5,000 this year, in 50 years, you may end up with a brokerage account balance of almost $587,000 — without having to contribute another dime.
Now ideally, your brokerage account will contain a diverse mix of assets, since that can be essential to generating solid long-term growth. And it’s important to check your brokerage account holdings from time to time to make sure your portfolio is well-balanced, and to just plain see how it’s doing.
But one thing you don’t want to do is check your brokerage account on a daily or even a weekly basis. Doing so could mess with your head — and cause you to make decisions that wind up hurting you financially.
When you’re overdoing it
Your brokerage account isn’t something to set and forget. It’s important to keep tabs on how your investments are doing from time to time.
Let’s say you buy shares of a given stock, and those shares keep losing value year after year after year. That’s not going to benefit you. If you never check up on your brokerage account, you may not realize those declines are happening.
At the same time, you don’t want to check your brokerage account too often, either. The reason? The stock market can swing wildly from one day or week to the next. If you check your account constantly, you might get thrown by those market swings. And that might drive you to make rash decisions that cause you to lose money.
Remember, you don’t lose money on stocks unless you sell shares at a price that’s less than what you paid initially. But seeing a loss on screen might prompt you to sell shares at the wrong time.
Let’s take a look at Netflix over the first half of February 2024. On Feb. 1, the stock was trading at about $567 per share. By Feb. 6, it was down to about $556.
Let’s say you were checking your brokerage account every few days and saw that on-screen drop from Netflix. It’s possible you would’ve gotten spooked and sold your shares at $556 to avoid further losses.
Doing so would’ve been a mistake. By Feb. 15, Netflix was back up to about $593.
Quarterly check-ins are generally your best bet
Your brokerage account isn’t something to ignore. But as a general rule, you probably don’t need to check up on it more than once a quarter. That’s a pretty good cadence, because it means you’re staying vigilant without going overboard.
That said, it’s a good idea to time one of your quarterly check-ins to early December. The reason? You may decide to strategically unload some stocks at a loss to save money on your taxes. But that would be a thought-out decision — not the sort of rash one that might ensue by checking your portfolio day after day.
All told, a good strategy for investing in stocks is to buy shares of quality companies and hold them for many years. If you stick to that strategy, daily or weekly portfolio check-ins become unnecessary. So there’s no need to put yourself through that stress.
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