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30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances by Christine Benz

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Chapter 32. Conduct a Portfolio Checkup

"I'm just not opening my statement."

I wish I had a dime for every investor who said that to me during the depths of the bear market. And I'll confess, that was my strategy, too, for at least part of the downturn. Although I had a general idea how much my husband and I had lost, I knew that seeing the number in black and white was just going to make us feel bad.

Moreover, many people who weren't opening their statements were doing so for a savvy reason. They knew that if they saw how much they had lost, they might be inclined to make changes that they would later regret.

In good markets and bad, it's always important to strike a balance between being too hands-off and too hands-on. If you're checking in on your portfolio holdings every day—or worse yet, throughout the day—you may be tempted to trade more than you need to. In turn, you may run up high tax and transaction costs. You're also more likely to chase hot-performing stocks and funds in the hope that they'll continue to outperform. If the market has gone down a lot, you might be inclined to switch to overly conservative investments at what could turn out to be an inopportune time.

But while a policy of benign neglect invariably beats overzealous portfolio oversight, you can't tune out your portfolio altogether. Even if you've taken care to assemble a simple, streamlined portfolio, you still need to check in periodically to make sure that your stock/bond mix is still in line with your targets, ...

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