Don’t be a moron. If you check your stocks every day and worry about the daily variations in your net worth, you’re being dumb.
Now, if you enjoy reading Smart Money and Forbes and watching chairs being thrown on CNBC, then by all means–go for it as a hobby. But remember, their “secret stock ideas” are designed to sell copies. And the pundits? Their stock picks are usually no better than chance.
Most long-term investors don’t need to check on their investments every day. The daily changes in stocks are almost always noise, plain and simple, and few 30-year returns were determined by the news of one day. In fact, I read a quote from the president of ETrade saying how, a few years ago, almost half his customers logged in once a day to check their stocks. “That’s crazy,” he basically said, noting that most people don’t need anywhere near that level of activity. (If you can find this quote, please let me know.)
As with most things, it’s not about being sexy, it’s about doing enough to get where you want to go. Wow, you have 450 personal-finance magazine subscriptions! You must really know what you’re talking about!! The same goes for blogs. Do you seriously think that the person reading like 50 personal-finance blogs is actually doing anything?
Give me a break and keep it simple: You need to build up a good infrastructure so you know what kind of asset allocation you want (stocks, funds, real estate, whatever), and then make sure you’re roughly on target. You need to occasionally monitor your investments to see how they’re doing. And you may want to set up automatic alerts through your broker/Google news to keep you informed on major news in the company. How often should you manually check on things? Probably every few months, with a major review every year. But not every day.
Relax. Once you get set up right, investing is easier than you think. Last month, I spend a few hours a month looking after my investments. That’s less time than I spent watching Law & Order reruns yesterday.
To post this image on your blog, MySpace, etc:
Do you know your actual earning potential?
Get started with the Earning Potential quiz. Get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.
Takes 3 min