A few weeks ago, Steve (one of our readers) commented that Personal Capital might not be a good tool because it encourages you to check on your portfolio too often. For those of you who haven’t tried it, Personal Capital is an account aggregator site. It can pull the data from all your various accounts to show everything in one cohesive picture. This is very useful for me because I was updating everything manually in an excel spreadsheet previously. Personal Capital also can help you keep tabs on your asset allocation, figure out what sectors you’re invested in, and check how much fee you’re paying in your 401k. They also provide portfolio management service for a fee. This last one is optional and I’m not using the service. I enjoy logging on to Personal Capital and I find the tools helpful, but Steve has a point about checking your portfolio too often. Here is his entire comment.
My own thought is that one of the great weaknesses of sites like Personal Capital, Mint, LearnVest, etc. is that they draw too much attention to day-to-day changes in one’s investment portfolio. Often, when people see the market tanking, and the value of their portfolio falling, they do exactly the wrong things which is to sell equities, and go into cash. When they see the market go up, they rush in and buy—again, exactly the wrong thing. Most people would be better off just establishing an appropriate portfolio allocation, making regular investments consistent with that allocation, re-balancing once a year, but otherwise forgetting about the daily valuation of their portfolio. If you really need to worry about what the value of your portfolio is on a day-to-day basis, you shouldn’t be investing in anything but cash or cash-equivalent investments. The tools are neat, but for the average investor, I am not convinced they are helpful in terms of increasing returns.
Steve is absolutely correct. The average investor should not obsess over the value of their portfolio every single day. You really can’t do anything about the fluctuation and it’s an easy way to give yourself an ulcer. Many investors sold low and bought high during the recent financial crisis because they got too anxious about the big drop in their investments. However, not all investors are alike.
I was a daily checker
I checked my portfolio almost every single day from 2006 until July 2012. It was part of my morning routine when I got to work. I’d quickly check email and then update my net worth spreadsheet. If I was busy, then I’d update it a bit later in the day. It was easy to carve out a few minutes to do this because I spent all day in front of a computer. I think I was tracking our portfolio so closely because I didn’t like my job and updating the spreadsheet felt a little escape. I don’t think I was so obsessive prior to 2006.
Anyway, I didn’t panic sell at any point during the last recession. Our net worth dropped over 25% during that period, but we just kept investing. Having been through the tough dot com bubble, I knew the stock market should recover someday. The best thing an investor can do is to add as much money as you can during those down years and that’s what we did.
Once I left my job and no longer spend all day in front of the computer, I check our portfolio much less often. These days I check once or twice a week and update my trusty old net worth spreadsheet about once a month.
It depends
I guess it really depends on your temperament. If you can handle volatility, then it doesn’t really matter how often you check your portfolio. On the other hand, if you’re prone to making emotional decisions, then you probably shouldn’t check your portfolio very often.
In conclusion, checking your portfolio every day isn’t the right move for the average investor. However, I don’t think the readers of this blog are average investors. We have long term goals in mind and we know the best time to buy stocks is during the bear markets. I still like Personal Investor and it is a useful tool for me. You just have to know yourself and not misuse it.
How often do you check your portfolio? Are you as obsessive with it like I was? Â
You can sign up with Personal Capital through this link.
Disclosure: We may get a commission if you sign up with Personal Capital through the links on this site. This probably colors my view a bit. I do log on once or twice a week and it is one of my go-to sites. I genuinely find the tools useful. Your mileage may vary, of course.
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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Men,
I was reading this and seeing myself. I’m also checking my net worth everyday because, well, basically my work is too boring and I don’t like it and can’t wait to reach my FI.
You’re an inspiration not only for americans but for every millennial in this world…keep going.
Please give me some advice how to make more money on my blog http://www.investidoresamadores.com which I just started here in Brazil. If you give me some credits linking it somewhere I’ll be really grateful ! Thanks
I’ve been checking almost daily for the past 2 years. It’s a good feeling, although fleeting, to see the balances oscillate over the course of weeks… especially when the paychecks and retirement contributions hit as well as the daily price changes.
Fortunately, it doesn’t really tempt me to do anything rash. I accepted long ago that over time it is probably a losing strategy every time I sell something and try to buy something else. Too many emotions and a lot of recency bias. It’s easy to see KO (not osmething I own now) not doing so hot for the last year and forget it’s been a strong holding for the past 10 with some mediocre years in between.
If behavior and temperament is the issue, then aggregator sites and even brokerages that allow easy buying selling enable this to happen… although neither is the core problem. It’s best to have every investor focus on developing a strategy or even hiring a financial adviser if they find it challenging not to touch the assets.
I only check our 401(k) balance on up days. Or, if the market has been in a long downturn, I will put off checking the balance for a few months.
We are still a decade or two from retirement, so I don’t really care what it does between now and then. I figure there is no point in worrying myself about it.
Very cool to be quoted on your blog. Thanks. And, I agree with what you shared. Personal Capital is a useful site, and not everyone using it is prone to make bad investment decisions for the reasons I suggested. In fact, it has a lot of positive aspects–easy to track/categorize your expenditures, great for monitoring your accounts for fraudulent activity, not having to remember so many damn passwords to multiple bank accounts, etc. Just remember to ignore the variance in your day-to-day investment portfolio!
Thanks for the thoughtful comments. I need them for blog topics. Have a great weekend!
I check my accounts far more frequently when the market has been rising as in the past few months. The increased account value gives me temporary joy. When the market is tanking for a period of time, I check less frequently because I don’t like to see the declined valued or am too scared to look sometimes.
My problem is that I’m a passive investor, so just buy index fund consistently around once every other month for my personal account with the leftover work income and every two weeks for 401k. This is a fine approach if someone wants to become somewhat rich over 15 to 20 years timeframe. In order to get much more wealthy one needs to do the homework and then act in a big way with 5 or 6 investments at most. For example, when Apple was around 400 few years back, I only bought 150 shares when I could’ve bought so much more.
The vast majority of our investments are in Vanguard funds. Mr. Maroon religiously checks the value daily at approximately 5:01p when the values update in Personal Capital. He also monitors the market throughout the day. While some might consider this to be obsessing, it is his escape from a job he doesn’t like. We’d never act on the results. We are 1000% committed to our long term goal. The everyday checks give us a bit of a high to see the good days. And we might look for an extra $100 here or there on the down days. More than anything, it gives Mr. Maroon something tangible to watch while we are still several years from financial independence and early retirement.
I’m sure he would check a lot less often once you guys exit the corporate world. It won’t be as important anymore. 🙂
Joe,
This summed it up for me:
“I guess it really depends on your temperament. If you can handle volatility, then it doesn’t really matter how often you check your portfolio. On the other hand, if you’re prone to making emotional decisions, then you probably shouldn’t check your portfolio very often.”
It really comes down to the individual. I used to not log in to my brokerage account for days or weeks at a time. I do log in much more often now, either through aggregators like PC or Mint, or directly. But I do that not because I’m freaking out or have to see where things are at, but rather because now that I write about stocks all the time, I pull a lot of reports from some of the research tools my brokerage offers. Sometimes I don’t even look at the value or what’s going on, but head right over to the research tab and what not. Volatility doesn’t bother me, so I wouldn’t have a problem staying on top of it. But I have better things to do in life than check my money incessantly. 🙂
Best regards!
As I get closer to retirement, I check more often than I should. Sometimes multiple times per day. Once a week might be enough, but it is fun to watch in times of up markets. In down markets I check a lot less.
I am probably a bit more active than the average reader. But I think checking your portfolio is a good practice in order to stay engaged in the market. It is the best way also to find good opportunities to put new money to work.
Maybe a hack is to check when the market is closed so that you can’t act impulsively.
Checking often isn’t neither good nor bad. Acting on that news on a daily basis though is a quick way to go broke. Before I make any trades, I review my investment rules and guidelines that I’ve set in place. It’s a series of questions and basic guidelines. I think it’s important for every investor to have this in place. It’s right next to my computer and I read it often. Always keep rules to invest by, and keep it in front of you. It will help you self regulate.
Hi Joe,
As our strategy is double, meaning dividend growth and market gain, I am checking our portfolio daily, this help me evaluating the market dip opportunities and therefore grown our snow ball.
Cheers, RA50.
This is good when you are adding new money constantly. We don’t have high income anymore so that’s another reason why I don’t need to check very often. Previously, I’d have an extra $5k to invest every few months or so.
We’ve been recording net worth every quarter and tally the investment portfolio’s value then. I do check our portfolio here and there but that’s mostly to check and see which position we should add to so we can enroll in DRIP.
We check at least once a month as I do a check up of our net worth on a monthly basis. If things are going well, I tend to check a little more often. Everybody enjoys good news, right? 🙂
Yeap, the good news give us incentive to keep saving. 🙂
Our portfolio isn’t in anything too exciting, so I only check on it when I’m online paying bills or something and it’s right there. We’re planning to move our investments and it will be interesting to see if I bother to seek them out or if we just ignore them completely and just make monthly investments…
That’s another factor. If your long term strategy is simple, then you really don’t need to check very often. Most of our investments are in index funds and blue chip dividend stocks so I don’t really need to check on them much.
I officially monitor my portfolio and net worth on a quarterly basis, and have recorded these figures for the past 25 years. In between, I occasionally check the portfolio value on days when the Dow is up by triple digits. It’s nice to see how much the value has increased since the last quarter or since the beginning of the year. But I never, never check the value on a day when the Dow is down.
Thanks for sharing. I definitely check more often when the market is up.
I used to be obsessive with it like you! I would check mine all of the time, more so out of curiosity than anything else. I knew the importance of investing for the long term, so even when the market tanked, I still kept my holdings and added to them as well.
Now I don’t look at my portfolio as much. Usually I do so once a week, just to see everything. I do a more detailed look at asset allocation about 4 times a year.
I agree that for many investors looking too often can be a detriment. The market tanking might scare them into selling. For these people, they need to educate themselves on investing because even without Mint or Personal Capital, I think they would head for the hills when the market tanks.
For me, it was an few moment escape from the job I didn’t like. Now that life is good, I don’t feel like I need to check all the time. It helps that I’m not working on the computer constantly.
Actually, I think it’s helpful to check monthly from the asset allocation point of view. When I was working we were adding significant new money every month. We rebalance by adding money where we were short.
I’m sure you’re right about the investors heading for the hills even without Personal Capital.
I am invested in a portfolio that can vary from 16 to 24 individual high-yield dividend stocks. And I check them every day — but what I am checking for is not their daily price change. What I check is the financial news feeds for developments pertaining to my portfolio companies. As my father in law told me once: “You’ve got to be nimble.” And that is absolutely true when it comes to sudden and unexpected news about the companies in one’s portfolio. You’ve got to be able to jump immediately — in or out — on good or bad news about a company in your portfolio.
This checking takes me 15 minutes a day in the morning — unless there IS news that demands my immediate analysis and action. If there is, then add a half-hour to the process, which may happen once a week.
Believe me, this routine has made me — and saved me — some nice chunks of change.
I’m pretty sure buying and selling on news is bad for the average investor. However, if it works for you then that’s great. My view is that by the time the average investor see the news, it’s already too late to act on it. These days, most of our portfolio is in index funds and blue chip dividend stocks. We don’t really need to buy or sell very often.
I wish I had jumped out of both BP and Transocean soon after learning about the Macondo Gulf of Mexico well explosion. Instead I waited on the order of months and it cost me big time.
It’s hard not to get obsessed with checking your portfolio daily. But now that you mention it, I will definitely keep that mind. I think I have to look for distractions, not the expensive ones of course.
If you have a good long term strategy, then you don’t really need to check very often. You just need to find something productive to do. 🙂