Why You Need to Review Your Brokerage Account Every 3 Months

by Maurie Backman | Published on Oct. 31, 2021

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Have money in a brokerage account? Here's why a quarterly review is a smart idea.

One of the smartest ways to grow wealth is to invest the money you don't need to pay your bills or sock away for emergency fund purposes. In fact, it's a good idea to open a brokerage account and start buying stocks, mutual funds, and whatever other investments align with your financial goals and appetite for risk.

But building up a portfolio of investments in a brokerage account isn't the only important step to take. Make a point to check up on your investments throughout the year. In fact, a good bet is to do a quarterly checkup every three months. Here's why.

It's all about performance and balance

A great approach to investing is to load up on quality stocks and other assets and hold them for a long period of time. Doing so could increase your chances of growing a lot of wealth (whereas if you invest and cash out quickly, you might actually lose money rather than gain it).

If you're adopting that long-term approach to investing, then you may not feel compelled to check in on your holdings too often. Say your portfolio loses a little value from one month to another. If you're investing over a 30-year period, that's really no big deal.

At the same time, though, it could be that a few investments in your portfolio are underperforming. And a good way to discover that is to do a quarterly checkup.

It may be the case that one of the stocks you own keeps losing value month after month. If that's part of a general stock market downturn, then there's likely no need to take action. But if every other stock in your portfolio is gaining value month after month, then you'll probably want to dump the stock that's doing the opposite. And checking in every three months could alert you to a downward trend.

Another reason it's important to check up on your portfolio every three months is that over time, the value of different investments can fluctuate. It's a good idea to maintain a diverse mix of investments. If you have too many investments from the same market segment and that specific segment takes a hit, your portfolio value could sink.

For example, let's say you start out with a portfolio that's 30% tech stocks, but over time, those stocks gain so much value that they now make up 50% of your portfolio. That situation probably calls for rebalancing by loading up on stocks from different market segments or other assets. And doing that quarterly check-in could help you avoid a scenario where you're suddenly overloaded in one market segment to a risky degree.

Pay attention to your brokerage account

An investment portfolio isn't something you should simply set and forget. Instead, make an effort to review your brokerage account every few months.

That said, one thing you generally don't want to do is check up on your investments every day. The stock market can swing wildly from one day to the next, and you might stress yourself out by checking in on your portfolio too often. Plus, seeing your balance drop overnight could lead you to make rash decisions, like unloading stocks before they've had a chance to recover from a dip. As such, it's smart to check in quarterly, but not much more often than that.

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