I’ll admit, I check my investments way more than I need to. Checking the stock market is a form of procrastination, along with Facebook and ESPN. I’ve tried to cut down; I even tried to hide the iPhone Stocks app deep inside a folder on the second page of my iPhone. But when I want to see how the S&P 500 is doing while I’m walking between hospital rooms, I’ll find the app and check. I know it is ideal to check your investments less frequently, but what is the optimal frequency?
Multiple Times Daily
Some investors check their investments multiple times a day. Like me, it usually is a quick 5 second glance at the Stocks app on their iPhone. Checking your investments more than once daily is definitely common among new investors. Even for seasoned investors, it is very easy to constantly be checking your phone after you initiate a new trade. It is hard not to compulsively check your Fidelity account to see how your investments are doing. The excitement of seeing your portfolio go up and down can be addicting, and I completely understand the allure of checking your investments multiple times a day.
However, if you are a seasoned investor who has been following the markets for more than a few months, it really doesn’t make sense to be checking it this frequently. If you subscribe to the index fund philosophy of investing, you are rarely selling any shares except for tax-loss harvesting purposes. It is hard for a long-term investor to justify checking your investments this frequently for any reason other than boredom. In addition, just like all distractions, checking your investments makes you less productive at work or at home.
I suspect that this is the most common frequency that people check their investments. Classically, people could read the Wall Street Journal each morning and see how their stocks performed using their magnifying glass to read the tiny print of the stock tables. These days, with online trading, it is so easy to check your portfolio on your iPhone or computer.
However, many famous investors would advise you to not check your investments daily. For example, Warren Buffett has stated in the past that he does not check his investments on a daily basis. Why would he need to? He invests for the long term. He also has advised investors like us to not frequently check our investments.
For the physician investor who enjoys following the markets, checking investments daily might be a reasonable frequency, provided they know how to stay the course and avoid the headlines. CNBC, Bloomberg, and the rest of the financial media have a vested interest in making news out of trivial market events, and will have a bias towards over-dramatizing inconsequential moves.
But what about knowing when the stock market is crashing? First of all, I bet that even if you didn’t have any money in the market, you would know when the stock market is crashing. It will make the front page of CNN and be on all of the TV screens in the hospital cafeteria. When the stock market is falling fast, financial news becomes front-page news. You will not miss when the stock market is declining. I would argue that a stock market correction would be when you would least want to be following the stock market. As Warren Buffett famously said in a New York Times editorial in October 2008, at the height of the financial crisis:
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. – Warren Buffett
I think that this would be an excellent choice. Since most physicians get paid on a biweekly or monthly basis, it would be optimal to invest your paycheck on a monthly basis to minimize cash drag. Banks and credit card statements typically send out monthly statements, so you could check your investments at the same time you pay your credit cards and other monthly bills.
Fidelity, Vanguard, and other brokerages creates quarterly statements. There’s a reason for this. It would be very reasonable to look at your investments only when your brokerage mails you your quarterly statement. You can rebalance your portfolio if there have been some big moves in the stock market, and invest any money you have saved up in the past 3 months.
It would hard for many readers of my blog or White Coat Investor or Physician on Fire, who are very passionate about investing and personal finance, to only check your investments annually. But remember, many physicians who work with a financial advisor will only have a sit-down meeting once a year. If you are healthy and without medical problems, you probably only see your doctor once a year for your annual physical. Given that index fund investing enables us to cut out the financial advisor, why not just look at your investments once a year as part of your annual financial checkup? You would still be able to rebalance your portfolio, make contributions, and tax-loss harvest.
One Final Thought
Here is one last thing to keep in mind when considering how often you should be checking your accounts. You may check your regular taxable account or 401k on a daily basis, but what about some of your other smaller accounts? It could be an HSA or a 529 that isn’t with Fidelity or Vanguard. You probably check this account much less frequently. Maybe you only check it once a year when you get tax statements or need to make a contribution. Have you ever noticed that this portfolio performs really well? Almost better than your main account? So maybe all the stress and energy you spend to check your account hourly, daily, even monthly doesn’t really change the account’s actual value. Indeed, just like screaming at your TV isn’t going to will your favorite sports team to play any better, checking your investments frequently isn’t going to improve its performance.
With these considerations in mind, I plan to decrease the amount of time I check my investments down to monthly. This will be in coordination with my monthly family financial meeting, where I look at my credit card receipts, pay my bills, and check my investments. For a long-term investor that will rarely sell stocks prior to retirement, there’s no reason for me to do it more frequently than that. If I had the willpower, I would only check my investments annually. But it’s hard for someone who has lived and breathed the financial markets for my entire adult life to only check once a year.
How often do you check your investments? Let me know in the comments below!