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I’m quite engaged with the Humble Dollar community and occasionally post articles on the forum. I’m also a keen reader of personal finance articles and books. Being a former business owner with a nearly 40-year-old degree in business and finance, I’m very interested in commentary and the goings-on in the business and finance world. But here’s the strange thing: I’m not massively engaged with my own retirement portfolio. I hardly ever think of it and rarely check its performance.
Oxymoronic behavior of the highest order, I would suggest, but I really think it’s the correct way to approach your portfolio. As a simple example, as I write this post, I could give you an approximate rounded value of my portfolio balance, but beyond that I haven’t a clue. When I next rebalance in April, that’ll be when I know the precise figure.
I assume, with HD readers in general, I’m preaching to the choir, but it’s always worth restating the reasoning and basics. Once you’ve set up a globally diversified portfolio and arrived at your asset allocation for your particular risk tolerance, doing anything else is normally counterproductive.
The reason this approach works is its power to neutralize the worst enemy in investing: ourselves. Constantly checking your portfolio—especially during market volatility—triggers emotional responses: fear and greed. Fear leads to selling low. Greed leads to chasing returns and buying high.
By actively taking a stance of “hardly ever think of it,” you pretty much eliminate the opportunity for these destructive behaviors to influence your long-term plan. In this context, apathy is your secret weapon.
If you’re still accumulating, you can control your savings rate, and we can all control our asset allocation. What we can’t control is the market’s performance. Focus your energy on the former. Only care about the latter when you rebalance back to your target allocation. After that, forget about it again and worry about something more important—like what to make for dinner tomorrow night or why the dog keeps staring at the wall.
Some truths bear repeating, if only because the rest of the world seems determined to check their portfolio apps seventeen times before breakfast.
Don’t know, don’t care. It’s brilliant.
Wisdom, illness, and dementia await us near the end. I’ve learned that an unexamined portfolio is not worth keeping, but I’m afraid my timing will forget me before I remember to check it 🙂
Mark, Would you be more engaged in a prolonged downturn? I appreciate the value of not tinkering with one’s financial plan/assets, but I wonder if your indifference to checking your portfolio is largely due to great returns over recent years. Timing is everything.
I’m not one hundred percent sure. I know during the 2022 bear market and the simultaneous bond slump I did pay more attention to my portfolio, although I never tinkered. I had a reason then: I was planning on retiring a few years later and was concerned about the impact on the plan. Now I have a ten-year fixed-term annuity covering my essential spending and a ten-year consumption bond ladder covering my wants, so I think at this present time I’m well enough insulated that I wouldn’t be concerned enough to pay much attention.
This discussion reminds me of the old joke: What’s the difference between ignorance and apathy? I don’t know and I don’t care.
😂
I like that you referred to a “globally diversified” portfolio. With 10 companies comprising about 38.7% of the portfolio, I don’t think the S&P 500 is sufficiently diversified. I do pay attention closer to our stock allocations.
Christine Benz at Morningstar put up an article “The Case for a ‘Good Enough’ Portfolio – Figuring out where you land on the maximizer/satisficer continuum could save you some time and money”.
These two groups are defined this way: The first is portfolio maximizers, or optimizers. The second group ‘doesn’t want to spend a lot of time on those smaller-bore issues. They’re more of what psychologists call “satisficers,” a term coined by economist Herbert Simon to be a hybrid of “satisfy” and “suffice.” When making choices, satisficers are looking for an option that’s acceptable rather than the best possible one. “‘
The article is free.
I was once one of the first group. But after 25+ years I’ve put my and the spouse’s portfolios largely on autopilot and closer in approach to group 2. I’m not a pure indexer, either. For one thing I don’t like the concentration in the S&P 500. Our portfolios are well distributed with small-, mid- and large-caps. Foreign stocks are about 25% of our stock portfolio and we are carrying a defensive amount in cash.
Berkshire Hathaway which is in the top ten by precent in the S&P 500 recently was given a stock downgrade. “The times they are a-changing”.
I look at our Fidelity accounts at least weekly for a couple of reasons. The first is because I’ve set a goal for this year and I’m getting close to reaching it. The goal is a big number in my opinion and I’m hoping that if/when I reach it, I might feel like I’ll be okay if I were suddenly on my own. It also might trigger me to move to a lower risk asset mix. The second reason is that we are using a fiduciary advisor and I’m tracking how our investments are doing compared to the hypothetical Yahoo portfolio I set up using 3 index funds. Unfortunately, the managed portfolio has been lagging behind in the last 4 months to a point where the difference is more than the fees we pay the advisory group. I’m waiting until January to decide what action to take. Also, like others here, I don’t have the set it and forget it mentality.
On occasion I compare my 45/45/10 portfolio of index funds to both Vanguard and Fidelity’s target date 2020 (the year we were both retired) portfolio those how we would have done compared to these funds. We consistently exceed their returns, but only by a small percentage.
Thank you and congratulations on your returns, David. I’ll take a look at Fidelity’s target date funds as a benchmark. I hadn’t thought of that.
I understand the sentiment and largely align with it. I’m not so hung up on fraud detection/paranoia that I need to check everything monthly beyond keeping a broad eye on a couple of bank accounts & CC statement.
Besides in something like a whole IRA portfolio how am I going to reconcile if one of the funds is off by tiny % because of an error made by the platform owner. You could easily make a full time job of monitoring everything at a total reconciliation level for the reward of catching a relatively insignificant error.
I do have to make an effort to track down and tidy up various “orphan” accounts over my lifetime. I bet I’ve got up to $5k out there that I’ve never really thought worth chasing down because of e.g. produce ID in person at location X. Might be useful payback for the “work” in retirement.
I’m curious: when you, for example, rebalance after a 5% allocation drift, do you use absolute drift or relative drift as your decision point? Since I rebalance only once a year, I’ve never really considered what choice others who rebalance more regularly make.
5% absolute or 20% relative, whichever is lower.
From the perspective of avoiding unnecessary investment changes, I think there’s a lot of wisdom in this concept and I generally agree. However, there is another perspective and I’d be remiss not to caution investors to know the details of their responsibilities as account owners for the timely detection and reporting of discrepancies. If there was unauthorized account activity and a significant period of time has elapsed before detection and reporting, that could be construed as negligence and might negatively affect the account holders ability to receive restitution under the law.
Mark – I hear what you’re saying, but I’m just not wired to do what you do. Maybe it’s the geek engineer in me, or maybe obsessive/compulsive behavior. I monitor all our financial activity with Quicken. I still balance the checkbook (it should probably be renamed the draftbook because I hardly ever write checks anymore) because I keep track of our spending. When I do a Quicken update for banking accounts, it also updates my Schwab accounts. I don’t act on the day-to-day activity of the Schwab accounts, but I do keep up with them. I just can’t “set it and forget it”.
I’m getting the same vibe from all your comments: namely, although you check regularly as seasoned investors, you don’t act on the observation. I think it’s still good practice for a lot of people, but obviously not everyone.
I am with you Jeff. I do check my accounts daily. The key is to have a financial plan and stick to it. Generally my plan is to rebalance when my allocation is off by 5%. I don’t respond to day to day fluctuations in the market. When the market falls enough I celebrate the chance to buy equities on sale.
Same for me, although I update figures in my Excel spreadsheets instead of Quicken. I look nearly daily at my 10 accounts (2 credit cards, 5 bank accounts, and 3 Vanguard accounts) primarily to make sure no scammers have taken advantage of our financial resources. I don’t have any interest in rebalancing since a good share of our investments are held in TDF’s which do the balancing for us.
Jason Zweig wrote an article in 2001 called “I Don’t Know, and I Don’t Care.”
https://jasonzweig.com/i-dont-know-and-i-dont-care/
I believe it still applies today.
Thanks for the link. I would definitely agree with the article.
Mark, I know you are correct, but….
Until recently I would look at the numbers a couple times per year; on 01/01 and 07/01. Since moving most accounts to Fidelity earlier this year, and linking remaining non-Fidelity accounts, my numbers are staring at me every time I log in to pay bills or monitor credit card activity.
My emotions have been quite steady when it comes to our investments, still only time will tell how I react when the bottom falls out, now that I am more aware of net worth.
Dan, I don’t think I would like to see the gyrations in my account balance on a daily basis, particularly if the market hits a rough patch. That’s when I’d be locking my laptop away in a broom cupboard lol
Perhaps I’ll send my computer to you for safe keeping.
Seriously, I’ll be fine. Market gyrations don’t bother me.
I check our accounts at the end of the day, but not so much during the day, unless I’m doing transactions.
Another reason for checking is because of the rise in cybercrime and data breaches. I just like to keep an eye on the picture, even though I have 2FA and lockdown in place. There have been many reports of investors being hacked at two of the brokerages I use. If I don’t catch it, and neither brokerage don’t say anything, it could go unnoticed for a long time if you only check it a few times a year.
Dan if you have sufficient cash and bonds in your portfolio they will buffer any significant drop in the markets, and will allow you to avoid selling equities. After 40 years of investing I have seen many down markets but have never reacted emotionally as I know the markets will recover and eventually continue their March upwards.
I like what you said, Mark. The final years before retirement, I did keep track of our net worth quarterly, but not necessarily to change things up. It was just to be sure we were still on track since we had to play catch up. We have been retired 22 mos now and have kept close track of things. Part of it was to get Spouse more involved Chris