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D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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Will you do this one thing?

Posted by Muthu on December 23, 2015

You are receiving consolidated account statement (CAS) every month. You can check your portfolio any time through Cams website. You also get individual account statement every month from each fund house. Some of you have created a portfolio tracker offered free by certain portals where you can check the value of your investments every day.

Technology is providing day by day update (in case of mutual funds) and even minute by minute update (in case of stocks). You can dynamically monitor the performance of your investments and net worth on a daily basis.

This feature of instant information is touted as client empowerment.

Nothing can be farther from the truth.

If you want to create huge wealth and be a successful investor; you’ve to see your portfolio less and less. Especially since you own only mutual funds and not stocks; once in a year viewing of portfolio is sufficient enough. Once in a year viewing also is just for your information and not for any decision making. Unless your advisor is able to provide a strong reason for changing the portfolio; one year time is too less to evaluate a portfolio. Learn to look for 5 year or 10 year averages in fund performance.

As I mentioned, even yearly review is only for your information and not for any emotional reaction. If you want to emotionally connect to your portfolio, give it a 10 year time to grow first. Successful investors either do not see the portfolio regularly or has mastered the art of not reacting emotionally. The latter is not possible for all. The former is a must for most of us.

As I’ve mentioned in one of my earlier pieces; according to a Fidelity study, the most successful investors are those who have forgotten about their investments and thereby allowing it to compound for a long time.

Believe me. If you can do this one thing of not looking at your portfolio frequently, your results would vastly improve.

Instant information, frequent review, dynamic monitoring, periodic commentary are all bad words. They add no value to you. Not only that they make you act inappropriately and harm your portfolio as well.

Look at your portfolio strictly only once in a year.

Will you do this one thing?

One Response to “Will you do this one thing?”

  1. I agree with the philosophy – may not be once a year but twice a year would be a more balanced and pragmatic philosophy for wealth creation and management.

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