3732: How Often Should You Check Your Stocks? (NOT every day) by Ramit Sethi of I Will Teach You to be Rich on Index Fund Investing

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[00:00:56] This is Optimal Finance Daily. How often should you check your stocks? Not every day. By Ramit Sethi of IWillTeachYouToBeRich.com. And I'm Justin Malek. And now let's get right to today's post as we optimize your life. How often should you check your stocks? Not every day. By Ramit Sethi of IWillTeachYouToBeRich.com.

[00:01:23] If you're wondering how often you should check your stocks, you're probably checking them too much. It frustrates me to no end when I see new investors constantly checking their stocks like it's their Twitter feed. It seems like even the slightest dip in the market causes them to freak out and start selling everything. I have one piece of advice for all you investment noobs out there. Stop checking your d***ing stocks every day.

[00:01:50] Sweating out the slightest variation of your stocks daily is a recipe for an anxiety attack and poor financial management. I don't check my stocks that often. They're long-term investments. But I get it. Television pundits and so-called investment experts make you think that every up and down is the end of the world and deserves two hours of coverage. Also, notice how they only ever cover the sexy stocks? Give me a break.

[00:02:18] The fact of the matter is you shouldn't even really pick stocks to begin with. Relying on a handful of individual stocks in the hopes of making money is a good recipe for disaster. After all, you don't understand a company's finances. Professional investors, economists, and fund managers, all of whom are paid millions every year, can't beat the market either. Remember, investing isn't about just picking stocks.

[00:02:47] Now, if you actually enjoy reading Forbes and watching the pundits purely for entertainment purposes, then go right ahead. There's nothing wrong with being entertained by Jim Cramer throwing chairs around on mad money. But you also need to keep in mind that 99.99999% of the advice you see out there is pure fear-mongering or entertainment. Ask yourself, do the pundits make money when their readers make money?

[00:03:15] Or do they make money from ratings and clicks? Exactly. Two things to always keep in mind when it comes to stocks. Number one, the professionals are almost always wrong. The stock picks of pundits and so-called professionals are usually no better than pure chance. And even professional money managers barely ever beat the market benchmark.

[00:03:41] In other words, they don't just underperform, but they do it by a lot. As William Bernstein, author of The Intelligent Asset Allocator, says, There are two kinds of investors, be they large or small. Those who don't know where the market is headed, and those who don't know they don't know. End quote. And number two, it's mostly just noise.

[00:04:06] If you're a long-term investor, and you should be, you don't need to check your stocks every day. You don't even need to check your stocks every week. I only check my stocks once or twice a month to make sure the automation is working. The daily changes in stocks are almost always noise, plain and simple. And very few, almost none, of your investments will be determined by the news of one day. Context is king in evaluating equities.

[00:04:36] I used to teach a class on investments. I would draw a picture of a rapidly declining stock and ask, What should I do with my stocks? About 25% of the class shouted, Sell! And 25% said, Hold it! While a couple of people in the class muttered, Buy more! None of them were exactly right though. The truth is, you need more context. If a stock, like say, Apple, falls a bunch,

[00:05:04] you have to look at the surrounding context and ask questions like, Is the general market falling? Are its peers, like HP, Dell, and so on, falling? Has Apple performed this way before? What happened then? Answering these questions provides a lot more context to the situation and can both put your mind at ease and also help you make better judgments. If a stock is falling but its competitors are fine,

[00:05:33] it will almost definitely bounce back. But if companies in that industry are cratering across the board, then you might want to start worrying. But who really wants to worry? Instead, I'd like to offer you a better solution when it comes to investing. Managing my stocks in a better way. Bottom line, I don't check my stocks every day and you shouldn't either. Instead, what I do is rely on a system

[00:06:02] that allows me to take the set-it-and-forget approach to my investments. My portfolio guarantees my money is automatically going where it is supposed to. That's what I prefer to do, and it's the same strategy recommended by Nobel laureates and billionaire investors like Warren Buffett. All it takes is two simple steps. Number one, pick a low-cost, diversified index fund.

[00:06:29] These funds invest your money across the whole market so you don't need to worry about picking the best stock. And number two, automate your investing so you do it consistently. That way you can stop chasing stocks and relying on guesswork. I've talked about automating your investments in hundreds of articles already, but I always feel like it needs to be said. It's one of the easiest ways to ensure you're investing your money properly and consistently.

[00:06:59] If you are just starting out in investments, it's great that you're here. For financial security, it's more important than anything else to start early. And don't worry if you think you're a little late to the game. After all, the best time to plant a tree was 20 years ago. The second best time is today. Man, I'm starting to sound like a fortune cookie. Frequently asked questions about how often you should check your stocks.

[00:07:27] Number one, what are the risks of checking your stocks too frequently? Checking your stocks too frequently can lead to emotional investing and impulsive decisions, such as buying or selling based on short-term market fluctuations. This can lead to underperformance and missed opportunities for long-term growth. It can also cause unnecessary stress and anxiety.

[00:07:52] Number two, can checking my stocks too frequently hurt my returns? Checking your stocks too frequently can lead to emotional investing and impulsive decisions, which can hurt your returns over the long-term. It's important to maintain a long-term perspective and avoid reacting to short-term market fluctuations. Number three, is it okay to ignore my stocks for a long period of time?

[00:08:21] While it's generally not recommended to ignore your stocks for a long period of time, there may be times when it's appropriate, such as when you have a long-term investment strategy or are invested in a well-diversified portfolio. However, it's important to check your stocks periodically to ensure that your investment strategy is still aligned with your goals. And number four, should I check my stocks more frequently if I'm a new investor?

[00:08:50] If you're a new investor, you may want to check your stocks more frequently to get a better understanding of how the market works and how your investments are performing. However, it's still important to avoid over-checking and making impulsive decisions based on short-term market fluctuations. You just listened to the post titled, How Often Should You Check Your Stocks? Not Every Day.

[00:09:18] By Ramit Sethi of IWillTeachYouToBeRich.com. I'll be right back with my commentary. Back in 2010, I started tracking every penny coming in and going out in a spreadsheet. Back then, I wanted to know where my money went. These days, I'm thinking more about where I'm headed. Monarch makes that easier by putting my accounts, investments, spending, and savings goals in one place. I still care about every penny.

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[00:10:51] Thank you to Ramit. I do think we should be careful with that line about a stock almost definitely bouncing back if its competitors are doing fine. I personally don't think that's something you can count on. A company can have problems of its own, and the fact that other companies are doing well doesn't tell you whether those problems will get resolved. But I like the reason Ramit gives for checking his investments. To make sure the automation is working. That's a specific thing to check.

[00:11:21] Did the contribution go through? Is the money going where you intended? You can answer that and be done. Compare that with opening an account just to see whether you're up or down. If you're down, you might want to check again later to see if it's gotten better. And if you're up, maybe you want to see if that continues. Either result gives you a reason to come back. So I think having a purpose for checking is helpful,

[00:11:50] beyond just deciding how often to do it. Before you open the account, know what you're there to find out. Otherwise, you could keep looking for reassurance from a number that changes every day. But that should do it for today. Thank you for being here and listening every day. Have a great rest of your day and I'll see you tomorrow, where your optimal life awaits.