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It’s easy to set up an investment portfolio and then not think much of it again until you get your monthly, quarterly or annual statements. However, leaving your portfolio too much to chance is not a great strategy for growth and planning. GOBankingRates spoke with financial professional Joseph Quevedo with Pinnacle Elite about how often you should check your portfolio and what to look for when you do.
The Monthly Snapshot
Investments are at the whims of the market, which can fluctuate every day. While you can’t base the performance of your portfolio on what it’s doing in any given month, Quevedo still likes to check it monthly for a number of reasons.
“Looking at it monthly keeps an eye on the prize, because at the end of the day, we’re all working toward retirement,” Quevedo said. “So that should be your focus on a monthly basis.”
Getting that monthly snapshot can also help you see how financial products, stocks, funds or other assets are doing compared to others. However, Quevedo made clear, “You don’t want to panic if the market goes down in one month, because it can change.”
It’s also important, perhaps even more so, to check out your portfolio every quarter, because this is how you can get a better picture of trends and patterns, as well as often recoup losses that occurred due to market corrections in one month.
“If I make any changes, I make them on the quarterlies,” Quevedo said. “Because the market moves every day that it’s open, and most people are too busy with work, family, school so they’re not really paying attention to this stuff.” A quarterly check is a good reference to see what your portfolio has been doing.
What To Look Out For
One of the things to look for quarterly is your rate of return — but remember to look at both the “average” and “actual” rates of return, Quevedo insisted.
“If your portfolio goes down 15% and up 15% in the same quarter, your average rate of return will be zero,” Quevedo said. “But the dollar amount is the actual return, and most people don’t look at the actual, they only look at the average.”
Additionally, it’s important to know “what the portfolio is designed to do,” Quevedo said. “If it’s a short term investment, are you getting a high rate of return? What are the fees on the rate of return? Or, is it a low rate of return with lower fees?”
Fees, in fact, are one of the ways that people lose money in their portfolios without knowing it, he pointed out. “One of the biggest killers to people’s portfolios are the little fees that are in between.”
There are broker’s fees, advisor’s fees, stock fees, etc. “If you have a 401(k), you have all these funds involved, so a company like Fidelity will charge you, the person handling your account will charge you and the company that the fund is in will charge you, as well. If the market does badly, then you’re losing more money,” Quevedo said.
If you are relying on a financial professional of some kind to advise, set up and manage your portfolio, Quevedo said it’s very important to make sure you find one who does not have a vested interest in some type of financial product that they’re selling you in order to make commissions off those sales — you want someone who cares about helping you to achieve your goals.
Become Financially Literate
Better yet, do the work to become financially literate yourself, through some of the many ways that are out there, he suggested. YouTube videos, financial workshops or working with a financial professional who is reputable and experienced are just a few ways to do so.
“Most people don’t check their portfolios because they don’t know what to look for. They don’t have basic financial education. It’s really not that hard, but it’s important to get into a habit of investing and checking your portfolio growth, and when you see it grow, you get excited.”
To summarize, Quevedo said, “I’m a fan of checking it at least once a month and then every quarter, dive into it. You don’t want to panic if you have a bad quarter. You’ll see the trends and you can move money around if you need to.”
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