Too scared to check your 401(k)? Too worried to peek at your brokerage account? Here’s when you should look — and when you should go for a walk instead
That’s the question when people consider checking the balances in their investment and retirement accounts.The... To look or not to look.
The Dow Jones Industrial Average DJIA lost 793 points, or 2.6%, to close at 29,875. The S&P 500 dropped 134 points, or 3.6%, to close at 3,666. Meanwhile the Nasdaq Composite COMP declined by 495 points, or 4.5%, to 10,603. “When markets are volatile, it’s often hard for investors to look away, but staying the course when you have a plan in place is typically a good decision,” said Leanna Devinney, vice president, branch leader at Fidelity Investments.
“When we understand that, the answer to this question becomes one primarily governed by an intent to mitigate the flaws of misaligned human perspective and only secondarily one of tactical strategy,” said the Bedford, N.H.–based adviser.To be clear, no one’s advocating hourly account balance check-ins. And no one’s calling for complete disregard for lengthy, indeterminate stretches.
If a person has an account they do not need to tap for at least seven years, it “should be periodically monitored, but not regularly stared at,” Cooper said. That means a quarterly, semi-annual or annual review should suffice. It becomes a different calculation when the time horizon is shorter, Cooper acknowledged.
But there’s no point in daily checks, which Waddell likened to daily trips to the scale. “I wouldn’t want to weigh myself every day. Over time, sure, but the daily fluctuations are virtually meaningless.” Batching losses and strategically selling is tax loss harvesting, and it’s a strategy some investors may want to consider for their brokerage account Minear said.
An account with values beaten down by market forces is going to result in a smaller tax bill for conversion, Minear explained. Of course, you’ve got to check your account balance first to even start considering the move.
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