Some people check their brokerage account balances on a daily basis. And people who do that may be causing themselves some unnecessary stress.
The stock market can swing wildly from one day to the next, so checking your portfolio every day isn’t actually a great idea. If anything, it might push you to make rash decisions that don’t benefit you financially, like selling a stock whose value has dropped temporarily rather than waiting things out and avoiding losses.
But while checking your brokerage account balance daily isn’t a good thing, it’s also unwise to never look in on your portfolio. If you don’t take that key step, you might miss out on opportunities to shift your assets in a way that benefits you.
You shouldn’t neglect your portfolio
If you don’t make any effort to monitor your brokerage account, for one thing, you might fail to recognize a losing investment that’s only going to get worse. It’s one thing for a stock you own to lose value due to a broad market trend. And also, a stock of yours might lose value temporarily following an event like a disappointing earnings call or, in the case of a healthcare stock, a drug trial that fails.
But let’s say you have a stock in your portfolio that you bought at a price of $100 per share a year ago. It may be that three months after you purchased it, the share price fell to $90. And it may have fallen to $80 a few months later, and so forth.
By now, that stock may be trading at $60 per share with a negative outlook, so selling it could be a good way to minimize your losses. But you may not know to sell that stock if you don’t peek at your brokerage account every so often.
Another issue with not monitoring your brokerage account is that you might end up with a portfolio that’s imbalanced. It’s important to maintain a diverse mix of investments, and to avoid putting too much money into a single asset or stock. But as stocks gain value, what can sometimes happen is that they end up comprising a larger chunk of your portfolio than expected.
A real-world example
Take NVIDIA, for example. As of this writing, its stock price is up almost 220% on a year-over-year basis. To put it another way, a year ago, a single share of the company traded at about $280. Now, a single share is worth around $893.
Now on the one hand, that’s a good thing, because if you owned a bunch of shares of NVIDIA during that time, your portfolio is up in that regard. On the other hand, let’s say the total value of your stock portfolio is $10,000. And let’s say that you started out with five shares of NVIDIA worth $280 a piece for a total position of $1,400.
It’s not so unreasonable to have $1,400 out of a $10,000 portfolio in a single stock. But if your five shares of NVIDIA are now worth $4,465 and your portfolio value in total is still about $10,000 (perhaps due to other investments of yours having lost value), that’s kind of a problem. It means that almost half of your brokerage account is invested in a single asset.
If the value of NVIDIA shares were to plunge tomorrow, your portfolio could lose a lot of money. So it’s important to check your account regularly and correct for imbalances. In this case, that would mean selling a few NVIDIA shares, taking the gain, and using that money to buy other stocks.
Give your portfolio the attention it deserves
You definitely do not have to check your brokerage account on a daily or weekly basis. You don’t even have to commit to checking on a monthly basis. But at the very least, aim to give it a look once every quarter. That way, you’ll see what’s going on, and you’ll be in a better position to take action as necessary.
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