How checking your portfolio everyday makes your financial decisions erratic?

According to you, what is the right frequency of checking your investment portfolio – monthly, quarterly, half-yearly, annually or something else?

The key to a successful financial life is clear, consistent and informed financial decisions.

All of these three traits get affected negatively when you keep checking your investment portfolio every day.

Let’s understand how this happens –

1) When the market is going down and you are checking your portfolio frequently… day after day you see your portfolio value go down. What do you feel?

– Anger

– Fear

– Anxiety

– Regret

And all the logic and reasoning with which you invested your money go out the window…

2) When the market is rising and you keep checking your portfolio everyday… you see your returns increasing every day. What do you feel?

– Excitement

– Greed

And the logic and reasoning again go out the window!

In both the situations you are overwhelmed by your emotions and they overpower your reasonable thinking brain. Your brain instantly wants to either decrease pain or increase happiness and you act…

investment portfolio

This is when your financial decisions become irrational and erratic.

For example –

i) When market is going down and you feel you are losing money – you want to cut down your losses & sell off your investments. While at the same time, a seasoned investor is investing more into the market

ii) When the market is rising and you see your returns increasing – you want to invest more money so you can get more returns, while a seasoned investor is either booking profits or following ‘wait n watch’ strategy.

To sum up, checking your portfolio too frequently will not help your investments grow at a faster rate but it will definitely make your decisions unplanned and erratic, which will hurt your portfolio in long run.

In the words of Warren Buffet, ‘Buy, hold and don’t watch too closely’!

According to you, what is the right frequency of checking your investment portfolio – monthly, quarterly, half-yearly, annually or something else? Do share in comments.