Want Less Stress Near Retirement? The No. 1 Day To Avoid Checking Stocks
Written by
Karen Doyle
Edited by
Cory Dudak
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There are two kinds of investors: those who set-it-and-forget-it, and the those who check their portfolio daily — or even several times a day. As with many things, the ideal practice is somewhere in the middle. Checking too often can produce anxiety over common market volatility, while ignoring your account can prevent you from maximizing your returns.
As you get closer to retirement, however, it’s normal to check your account more frequently, particularly if you’re a middle-class investor who will need that money to live a comfortable retirement. You want to be on top of any market shifts that could bring your balance down, as you have less time to recoup any losses. But is there a right time to check the market? Or, maybe more importantly, is there a time you should not check?
Here’s what you need to know.
Don’t Check the Market on This Day
There have been numerous studies done on stock market returns by day of the week. According to Financial Architects, LLC, the day of the week with the lowest average return is Monday. Other research, including another from JP Morgan Wealth Management, indicates that while Monday tends to be the day on which markets drop the most, the largest single-day gain the market has ever had was on a Monday in October 2008, when it saw an 11.6% gain. Then again, the largest single-day drop (20.5%) was also on a Monday in 1987.
It seems it would be wise to refrain from checking the market and your portfolio on Mondays. However, checking the market is a little bit like weighing yourself — if you do it every day, there will be ups and downs that seemingly have no explanation. If you only do it once a week, however, you’ll have a better idea of the true state of your portfolio — or your waistline.
Watching the Market Is Different From Trading
Much of the research on the best days in the market is based on trading. Numerous studies have been conducted on which days are most and least volatile, and on which days you should buy or sell. This is very different from checking your portfolio balance.
Middle-class investors who are within five years of retirement want to carefully weigh any changes to their portfolio. T Rowe Price suggested reviewing your asset allocation at age 60 and adding more exposure to bonds and cash. Since you will need to access these funds within five to ten years – maybe sooner – you will be more susceptible to risk in the short term.
Asset allocation is important at any age, but your investments should almost always become more conservative the closer you get to retirement. Once you are retired, you may want to become more conservative still, shifting your investments from stocks to bonds and cash. Charles Schwab, for example, recommended 35% of your portfolio be in bonds and 5% in cash at age 60; 50% in bonds and 10% in cash at age 70; and 50% in bonds and 30% in cash at age 80.
The obvious reason for this shift is that more conservative investments provide more reliable returns, so you can worry less if there’s a market downturn. But this becomes doubly important if you’re a market-checker. If you’re the type of investor who follows their portfolio closely, checking their balance frequently (except on Mondays, because now we know better!), having a conservative asset mix should be less stressful for you.
Monitoring your portfolio is something you should do as often as is comfortable for you. If checking daily, or even weekly, stresses you out, save it for once a month. If you need to know your balance a few times a week for reassurance, that’s okay, too. In any case, when retirement comes around, you’ll know you have saved enough to live comfortably.
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