So pay very close attention to it
We’re taught as long-term investors to tune out the noise. We’re not day traders and we’re not speculators. We’re Bogleheads and Buffet-ologists who have understood for quite a while that time in the market beats timing the market.
I have been predominantly an index fund investor for the better part of a decade now, with no intention of withdrawing from the growth assets in my portfolio any time soon. Yet, contrary to most personal finance advice, I do actually check my balance daily. I do this for a few reasons…
Reason 1 — It makes me completely desensitized to big market swings
I do not act on any daily fluctuation in the market. This includes “buying the dip” — I don’t invest additional funds during market crashes because I already have the maximum amount I am comfortable with invested rather than sitting in cash.
As an early investor, my biggest fear was a crash decimating my balance. And that fear only grows with more money invested. I would consider a bad day in the market to be about a 1% drop, a bad month a 5–10% drop, and a catastrophic month to be anything more than a 20% drop. On a $1M portfolio, that equates to a balance decrease of $10k in a single day, $50–100k in a single month, or over $200k if a seismic event (like a lending crisis or a pandemic) took hold.
The possibility for a sharp decline is unsettling even for experienced investors, and it can be a complete non-starter for new investors just looking to find their financial footing. Watching my balance daily makes an unrealized loss of tens of thousands of dollars feel like a non-event because I know a day of an equal or greater swing in the opposite direction is likely soon to follow.
Reason 2 — I genuinely find market behavior interesting
A common thing you’ll find from people in the personal finance writer community is that they love talking about markets and investments, almost to a level bordering on weird. They may not have started out that way, but the freedom that investing has brought to their lives makes them, understandably, interested in digging deeper to accumulate and share more knowledge about it with others. It’s admittedly hard to talk to me for more than 30 minutes without me making some kind of segue into money and wealth building.
Reason 3 — It keeps my eye on the custodians of my funds
Nobody cares about your money as much as you do. If your funds are invested through various platforms, you may not notice the effects of their fees, expense ratios, or automation practices when only taking a quick peek a couple of times a year. Constant monitoring may help you evaluate if you should consider shifting assets from one platform to another, even if your actual fund allocation remains largely unchanged.
Reason 4 — It keeps me keenly aware of my financial strategy
If someone asks you about your portfolio allocation, you should be able to answer without having to think too hard about it. As we age and our life circumstances change, our strategy may need to change with it. This aspect doesn’t necessarily require one to check in on their finances daily, but for me, it helps internalize my plans. Any time I encounter an unexpected expense or am considering a major change in my life with financial implications, I don’t have to log into various accounts to validate what I can or can’t do — I already know.
“Don’t look at your investments” is advice with good intentions. It dissuades you from making rash decisions after large but historically normal swings in market behavior. However, this is not the same thing as neglecting your financial strategy. Your money is your greatest tool for elevating your future state. Pay close attention to how it is working for you and stay the course when things get shaky.