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- Investment apps have made it too easy to check your investments, financial advisors say.
- Checking your investments too often could lead to emotional decision-making — and big losses.
- Investing should be a long-term game, so choose companies and funds you can stick with.
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Investors have been on a wild ride over the last few years, and that's especially true of the stock market in 2020. The pandemic initially wreaked havoc on the economy, causing the Dow Jones Industrial Average to plunge to around 20,000 in March of 2020.
If you were investing in 2020 and closely watching the numbers, it would have been far too easy to panic completely, sell, and move your investments to cash at the worst possible time. Unfortunately, plenty of investors did exactly that, causing them to lose out on the astronomical gains the stock market has seen over the duration of 2021.
This is part of the reason financial advisors suggest only checking your investments once per month, once per quarter, or even less than that.
Why does it make sense to ignore the ups and downs of the stock market? We asked financial advisors to explain.
1. Investing is (or should be) a long-term game
Indianapolis financial advisor Thomas Kopelman says many millennials are using investing apps to track their portfolios more than once per day, but "this is not how it is meant to be."
Checking even the best investment apps too often turns investing into a game and can push people to make sudden changes based on media headlines and fear, he says. In the meantime, the time horizon for young (or even younger) investors is so long for retirement that they don't need to keep an eagle eye on daily market movements.
"The goal with investing is to find investments you truly believe in long-term and invest in them for a very long time," says Kopelman. "This is how you take advantage of compounding and build wealth."
2. Your investment strategy shouldn't change on a whim
Financial advisor Jeff Rose of Good Financial Cents says that, ultimately, your investment strategy should be directly correlated to your financial or retirement goals. If you have a plan in place and you've sought guidance from a professional to help put this plan in place, then the daily fluctuations don't matter, he says.
Rose compares constant investment tinkering to a 10-hour drive to the beach where you end up running into some rain along the way.
"Would you turn back and go home, or would you continue?" he asks, adding that he thinks most people would keep pushing forward since they hadn't reached their goal.
"That's no different in planning for your retirement and encountering a few thunderstorms along the way in the form of stock market volatility," says Rose.
3. You'll stress for no reason
Financial advisor Jordan Nietzel of Trek Wealth Planning also points out that checking your investments daily is a recipe for stress and anxiety. If your investment horizon is decades into the future, then daily, weekly, and monthly market movements are not important to the end goal, he says.
He adds, "Stay focused on the big picture and don't lose sleep over the inevitable ebbs and flows of the market."
4. Ignoring your portfolio helps you avoid emotional errors
According to wealth advisor Stephen Carrigg, the biggest reason to not check your investments more than a maximum of once per month is to reduce emotional errors. He points out that the market dips 5% or more on average a few times per year, and your emotions might tell you to sell on the darkest days.
If you listen to that voice, all you are doing is locking in a loss or a lower value than you had just prior.
"The best investors I know might look at their accounts once per month maximum," says Carrigg. "Set the plan, invest accordingly, and play the long game."
5. There's almost too much information out there
Financial planner Gregory J. Kurinec of Bentron Financial Group says individual investors have seen such a dramatic increase in access to information over the last 15 years, and that information has been used to empower people to make better, more informed decisions.
When it comes to the stock market and other investments, though, there is so much conflicting information that people feel overwhelmed, more unsure of themselves than ever, and more prone to experience FOMO (Fear of Missing Out).
If they take a step back and stop reviewing investments on a daily basis, they can let their long-term financial plan play out, says Kurinec. He also points out that billions of dollars were made by previous generations who took a long-term buy-and-hold strategy.
"This is a tried-and-true method to build and protect wealth," he says.
6. Young investors have a long way to go to age 59 1/2
If you're investing for your golden years, chances are good you won't even need your money for a while. Even if you're 40, for example, you will likely have a 20-year or longer runway to retirement.
Financial advisor Cameron L. Church of Sound Foundation Wealth Advisors also points out that most people need to wait until age 59 1/2 to withdraw money from their retirement plans without penalty anyway.
"For many of us, that could be several years out, and the markets are going to move a lot in that time," he says. "If you've done your homework or worked with someone to create a good long term investment plan, trust that it's going to work."
7. For most people, time is on their side
Plus, generally speaking, time is a major asset for investors who have plenty. This is especially true for individuals who have 15 years or longer before they plan to access their money, or before they'll really need to.
With that in mind, wealth manager Richard Cooke of Vincere Wealth Management points out that checking your investments daily is like planting an oak tree and digging it up every few days to check on the roots.
It's important to understand your time horizon and your risk tolerance, he says. Other than that, you should let time do what it's supposed to do and focus on the other important things in your life.
8. You are unlikely to outperform the market
Financial advisor David H. DeWitt of DeWitt Capital Management also points out a very inconvenient truth about investing — the fact that you probably won't "win" at the game you're playing anyway.
DeWitt says that firms like Dalbar report every year that the average investor performs significantly worse than the average stock market return.
"The only way this is consistently possible year in and year out is from making poorly timed buy-and-sell decisions, often fueled by emotions," he says. "The more you look at your investment account, the more you forget about the big picture, and the more susceptible you are to making a decision you may later regret."
9. Your best bet? Focus on what you can control
Finally, financial advisor Russ Ford of Wayfinder Financial says most people have limited time and mental energy to spend thinking about money. With that in mind, most people are a lot better off focusing on areas of their life where they actually have some say.
In the same way a fitness expert would tell you to spend your limited fitness time focusing on eating healthy food and working out more often, Ford says the majority of people would be better off focusing on saving and investing more each month. After all, putting away more money for retirement is going to be a good move regardless of what the market does over the next decade or two.
Better yet, Ford says to spend some of your extra energy reevaluating the rest of your financial life plan such as goal setting and life planning, tax planning, insurance and employer benefit planning, debt planning, education planning, and estate planning.
This article was originally published in November 2021.
Freelance Writer
Holly Johnson is a credit card expert, award-winning writer, and mother of two who is obsessed with frugality, budgeting, and travel. In addition to serving as contributing editor for The Simple Dollar and writing for publications such as Bankrate, U.S. News and World Report Travel, and Travel Pulse, Johnson ownsClub Thriftyand is the co-author of "Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."
