There is no right answer to the question of how often you should look at your investments. Your personality will determine that. Some investors love to see how their investments are performing on a daily basis, while other investors forget they have investments. If you are too obsessed with your investments, you run the risk of making changes based on emotions and that will cost you in the long run; and if you never pay attention, you run the risk of not making necessary adjustments when needed. There are some assets that you can do nothing about, even if you know that they are going to struggle, like the house you live in. The value of residential property in Johannesburg has declined by 2% after inflation over the last fifteen years, compared to a gain of 54% for Cape Town. Even if you knew this was going to happen in advance, what would you have done?
For longer-term assets like equities, not getting involved is also a good idea. We have all seen the graphs of the American S&P500 index sawtoothing up over the years. We only have to look at the S&P500 for this year to realize that paying too much attention to shares over the shorter term, is futile. After a slow start it went up a little, then collapsed in early April just to be at near all-time highs again today. The only asset class you have to monitor on a shorter-term basis is your cash. We all have debit orders and non-discretionary expenses on a monthly basis which can create headaches if there is not enough money in your banking account. At the same time, if there is too much cash sloshing around in your checking account, you are losing interest you could have earned on a longer-term, higher-yielding account.
We would recommend that you start your investment journey with a comprehensive plan, taking into account your age, financial situation, family situation, debt levels and things like that. Once you have implemented this investment plan, you should give it time to play out and only get involved again when something material changes in the initial assumptions made. So if you plan to change jobs, start a family, buy a new house, retire, or give your estate planning a major overhaul, you should re-evaluate your investment portfolio.
With all of this said, it is a good idea to understand the state of your investments. Ignorance is not bliss. Even if you don’t make any changes, it is healthy to understand why something is doing well and others not. You should be an information giver and not an information taker around the braaivleis fire. As with all things in life, a good general knowledge applies to investments as well.
