Why You Shouldn't Check Your Brokerage Account Too Often

Checking your account too regularly could backfire.

If you want to build wealth, you're probably going to need a brokerage account so you can invest money. A brokerage account allows you to buy stocks, bonds, ETFs, mutual funds, and other assets that will hopefully earn reasonable returns and allow you to put your money to work.

But once you've opened a brokerage account and bought investments you believe in, it's crucial to avoid one key mistake: signing into your account too often to check the performance of your investments.

Why checking your brokerage account too frequently can get you into financial trouble

Looking at your brokerage account too often can pose problems because it can interfere with your ability to practice the best and most proven investment strategy.

See, if you want to maximize the chances that your investments will be successful, you want to carefully research different types of assets you can buy, build a diversified portfolio, and leave your money alone for the long term. By doing this, you don't have to try to time the market and buy at rock bottom prices, and you significantly reduce the risk of losses compared to higher-risk strategies such as day trading.

But if you're signing into your investment app often and constantly monitoring your investment performance, it becomes harder not to react and make bad decisions based on emotion.

Most notably, you could end up selling assets at an inopportune time. The market naturally goes through cycles, and crashes can occur that cause the value of your investments to plummet. If you see that your stocks are starting to lose value, this could prompt you to make a fear-based choice and sell because you feel like you need to limit your risk of loss. The most likely outcome of that, though, is that you'll miss out on the recovery that almost inevitably follows downturns, and you'll end up turning temporary losses on paper into permanent losses in the real world.

You could also start to feel like you need to be more active in buying assets, especially if you see some popular stocks performing well. But this can also lead to bad choices if you invest just to jump on the bandwagon of what others are doing. Often, you won't notice that particular investments are going up dramatically in value until they've already neared their peak, which could be a recipe for buying high.

How often should you check your brokerage account?

Instead of checking your brokerage account regularly, you should focus on building a solid investment strategy and identifying assets you would be happy owning for the long term. Then set up automated investments in them using dollar-cost averaging, which allows you to buy a set amount of each asset at a designated time. With this approach, you eliminate the problem of trying to time asset purchases perfectly, because at some point, chances are good you'll be buying at a good time and will purchase a larger stake when that occurs.

If you are confident in your investments, you don't really need to check your account more than once every year or so to rebalance it and make sure you're still happy with your level of risk. If you can't wait that long, checking your balance every few months should suffice.

While this may seem counterintuitive, being less hands-on can ultimately be the best approach. By not checking your balances too often, you'll be less likely to react to natural fluctuations based on your emotions and make decisions you could regret.