Keep Your Sanity: Checking Your Portfolio Balance Too Often Can Cause Needless Stress
How often do you check the balance of your retirement savings plan? You don't want to ignore your investments. But you can over-do the monitoring.
Scott Horsburgh, president of Bloomfield Hills-based Seger-Elvekrog Inc., a personal money management firm, says the least happy and most stressed-out investors, tend to be those who check their portfolio balances most often.
Horsburgh said going online for a daily check of your portfolio may seem like a prudent thing to do – and it can be in some cases. But, more often than not, you may be exposing yourself to undo grief by internalizing every up and down in the markets. Most people investing for the long term using professional advisers or mutual funds don't need to do that.
The exceptions, Horsburgh says, are investors who make their own stock decisions, as opposed to following the advice of a professional. They might have little choice but to stay on top of things day to day.
“They must keep up with their investments on a daily basis because no one else is. Most of the time, a diversified stock portfolio should move along with the market,” Horsburgh said. “However, significant deviations in share prices should be investigated, but first they have to be discovered by the investor. Investors in individual bonds should also keep regular, but not necessarily daily, tabs on their portfolio.”
Most bonds do not trade in a given day, according to Horsburgh, so the indicated price is a theoretical price based on the prices of similar bonds that did trade that day.
“Significant changes in bond prices – more than 2-3 percent in a day, or a protracted downtrend – should be investigated for signs of deteriorating credit standing,” Horsburgh said. “Someone without the time or stomach for this kind of work should turn their portfolio over to a professional.”
Mutual funds require much less frequent checking, whether they are in a retirement account or in an individual account.
“These are professionally managed portfolios and just do not have the bullet-to-the-head risk – an immediate 20 percent decline, for example – that exists with individual stocks,” according to Horsburgh. He says funds may consist of risky securities, but the investor will not be able to discern the impact of one stock blowup on his diversified fund. “Fund investors should perform a thorough annual assessment of their mutual fund portfolio. Reviews of the long-term ranking of their funds compared to peers will help the investor assess whether the fund is still well run.”
For all investors, Horsburgh recommends avoiding the temptation to beat the investment pros at their own game: “The market re-prices securities to reflect new information far faster than the general public. Studies have shown that investors tend to hurt their returns by trading too often – whether in stocks or funds – usually based on information that has already been priced into the market. The way to win is to develop the right long-term strategy for you. Stay focused on the long term and do not get overly caught up in short-term gyrations.”
– By Ed Coury, senior editor and Midwest bureau chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950.
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How often do you check the balance of your retirement savings plan? You don't want to ignore your investments. But you can over-do the monitoring. 
