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The Ongoing Investment Process
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You change your oil every 3,000 miles. You get a checkup once a year. But how often should you review your investments?
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The short answer is as often as you want to—from once a day to once a year. You can follow the market’s every move or ignore it until you get your account statement in the mail.
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There’s an important difference between checking in on your investments and tinkering with them, though. Once you’ve decided on your investment plan, you shouldn’t change it every time you discover a new hot fund or when the market takes a dive. Instead, you’ll want to follow these basic rules.
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Pick a date you’ll remember—maybe your birthday—and gather all the information you need, such as account statements.
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Have they changed? Are you still saving for your child’s education? Are you getting near retirement? If your goals have changed, so should your game plan.
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If one of your funds has grown so large (or shrunk so small) that your original plan is out of whack, you may want to rebalance your portfolio.
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How are they stacking up? In the normal course of events, funds have on and off years. But if a fund has trailed its benchmark for several years running, consider replacing it.
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Of course, there are times you’ll want to move quicker. For instance, if you change jobs you’ll need to decide what to do with your old retirement account right away. You’ll also want to re-examine your plan after any major life change, such as a marriage or divorce.
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Funds change, too. Fund managers quit, funds alter their investment strategies, and some even cease to exist. If anything big happens to one of your funds, you’ll want to give it a second look.
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If it makes you happy and keeps you occupied, check in on your funds as often as you want. Just remember, you’ll be better off not fiddling with your plan unless something really needs changing.
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