Investing 101: Keeping an Eye On Your Portfolio

Common sense tells us to keep a close eye on all things related to our money. Monitor your bank account to make sure no one is making fraudulent charges. Check your credit score so you know you’ll be able to make that big purchase when you need to. Evaluate your spending to ensure you’re sticking to your budget. And the list goes on.

But what if I were to tell you that the opposite was true when it comes to your investment portfolio? In this lesson of ‘Investing 101’ we advise people to rarely check their investment portfolio (though, keep in mind this can be different for everyone).

Reducing the Frequency of Portfolio Check-ins

Why shouldn’t you check your investment portfolio regularly? Checking less frequently will prevent you from making knee-jerk reactions that can affect your investment plan. If you went in there and saw you weren’t having a great quarter, would you be able to just sit back and not make changes? Probably not. In fact, it’s human nature and this concept has a name: loss aversion. Loss aversion is the idea that we hate losing so much that we make bad decisions in order to avoid feeling that way in the future.

But don’t worry, just because YOU shouldn’t check your portfolio as often doesn’t mean that no one should be keeping an eye on it for you. Your financial advisor should (and does if you’re working with Pacific Landfall) check it far more often than you. Financial advisors are able and trained to keep emotions in check, which helps us stick to the long term investment plan.

I understand it can be hard to avoid keeping an eye on something directly tied to your financial well-being, so here are a few investing 101 tips that will help.

1. Schedule portfolio checks. Mark dates on your calendar throughout the year, and only check it then. Creating a schedule will help you stay on track and avoid checking your portfolio impulsively, or too often. If you get in there and have questions or concerns, consult with your advisor before making changes.

2. Establish ground rules for changes. You and your advisor worked hard to develop a long-term investment plan that works for you, don’t ruin it by making changes willy nilly. Your investments should be goal-oriented, so you have to give them time to work. But sometimes change is necessary. Create ground rules for making changes to the portfolio so you can make changes when you really feel you need to. At Pacific Landfall, we create what’s called an Investment Policy Statement at the beginning of our advisor/client relationship that addresses grounds for changing asset allocation and other changes.

If you want peace of mind when it comes to your investments, it’s important to have a financial advisor that values communication and is willing to discuss your finances with you regularly.

If you haven’t heard from your advisor in awhile, it’s time to change that. At Pacific Landfall, we’re committed to checking in with you regularly and having in-person meetings once a quarter. If you like the sound of that, let’s meet! Schedule a complimentary call or in person meeting today.