Here's What Happens When You Check Your Investments Too Often

It's never been easier to check your investment portfolio. You can do it in a matter of minutes online, and many brokers also offer stock trading apps that let you review your account from your phone.

As a general rule, it's good to stay on top of your finances. But when it comes to brokerage accounts, there is such a thing as checking in too often, and it can have some serious negative drawbacks. Here's what can happen and how much checking in is too much.

You're more likely to be stressed about losses

The stock market is volatile, so it goes up and down from day to day. The more you check your portfolio, the more you'll notice those gains and losses. You might think that since there will be good days and bad days, it evens out, but that's actually not the case.

Studies have found evidence of a behavioral trait known as loss aversion. This refers to how people are more sensitive to losses than to gains, even of equal amounts. So, you'll likely feel more stress on days when your investments are down and comparatively less relief on days when they're up.

Nobody likes seeing that they've lost money, even if it's just a temporary loss on your investments. For your mental health, you're better off not checking your portfolio all the time. After all, it stands to reason that you're going to see far more down days if you're checking every day compared to once every three months.

It could lead to poor investment decisions

Seeing more of your portfolio's bad days isn't just demoralizing. It can also negatively impact your decision making. Investors with loss aversion sometimes become less willing to accept risk and shift to more conservative investments. A 1997 study on loss aversion found that:

"The investors who got the most frequent feedback (and thus the most information) took the least risk and earned the least money."

Although conservative investments may seem reasonable, they severely limit your portfolio's growth potential. The stock market is more volatile from year to year, but it also has an average historical return of 10% per year before inflation. That's far greater than more conservative investments, such as bonds.

You're wasting your time

Last but not least, there's not a whole lot to see from your investments on a daily basis. They're probably not going to skyrocket in value overnight, nor is the market going to completely collapse.

If you have your money in quality stocks or investment funds, they'll likely gain and lose a few percent here and there. That only matters if you're planning to buy and sell frequently, but this type of investing generally isn't recommended. The most reliable option is long-term investing, where you make good investments and hold them for five years or longer.

How often should you check your investments?

As a rule of thumb, check your investments every one to six months. Anywhere within that time frame will keep you up to date on your portfolio, without causing unnecessary stress. Some investors go with once per quarter as a happy medium.

Everybody has their own preferences, so if you want to check more or less often, it's not necessarily an issue. What's important is that no matter how often you check in, you don't make any knee-jerk decisions, such as panic selling because of a temporary price drop.