Looking at account to get used to fluctuations?

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drgenefish
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Looking at account to get used to fluctuations?

Post by drgenefish » Sat Jul 13, 2019 10:03 pm

I'm only recently getting serious about saving to retirement.

While my dollar amount invested is low (compared to what it will be in 20+ years now that I got myself together), Should I look at my account frequently to just start getting a stomach for steep ups and downs? To develop my "stay the course" muscle.

Or train myself to not look at all...once a year to balance.

(As a side question - if you only look once a year do you go back and make sure all the auto investments went through properly? Would it be too late to fix an error?)

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ResearchMed
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Re: Looking at account to get used to fluctuations?

Post by ResearchMed » Sat Jul 13, 2019 10:16 pm

drgenefish wrote:
Sat Jul 13, 2019 10:03 pm
I'm only recently getting serious about saving to retirement.

While my dollar amount invested is low (compared to what it will be in 20+ years now that I got myself together), Should I look at my account frequently to just start getting a stomach for steep ups and downs? To develop my "stay the course" muscle.

Or train myself to not look at all...once a year to balance.

(As a side question - if you only look once a year do you go back and make sure all the auto investments went through properly? Would it be too late to fix an error?)
Your phrasing of "look frequently" is precisely what we ended up doing, and it ended up working very well indeed.

I check almost every day. Part of that is just to watch for problems, but mostly it was to "see what is happening".
We also think of it similarly to dieting. Many recommend not weighing frequently. But we each found it very useful to weigh daily, and then to make note of ONLY "each new low".
If it was "up", we'd know, and try to do better. It it was "lower", time for a congratulatory comment.

Similarly, with investments, we make note of "each new high", and smile.
Lows? Mostly ignored. Since I do the monitoring, I just don't mention these to DH. And I also don't pester him with *every* new high... just when we pass some sort of general marker.

This works for us, very well.

(And yes, I've occasionally found a "problem", one that might have been more difficult to fix much later.)

But you need to make a decision, especially early on, NOT to panic if the totals go down.
Make note of the benefits of dollar cost averaging, and also of the value of long term compounding :happy

RM
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dbr
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Re: Looking at account to get used to fluctuations?

Post by dbr » Sun Jul 14, 2019 10:27 am

I wouldn't be obsessive about looking, but in general yes. I think advice to "not look" might be a good metaphor but as literal advice it is silly.

An option is to look at the history of investments of every type and altogether, for which there are jillions of charts, and learn the characteristics of investments.

As a practical matter everyone should note what is going on their accounts at some reasonable frequency, maybe a monthly review.

MikeG62
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Re: Looking at account to get used to fluctuations?

Post by MikeG62 » Sun Jul 14, 2019 10:48 am

To state the obvious, looking when the account is fluctuating up is a lot easier than when fluctuating down. :wink:

I'd try and get in the habit of not looking more often than necessary. Warren Buffet has said something along the lines of, "imagine if you could look up the value of your house every day or week or month - what sense would that make"?

I download my statements monthly. So I am more or less forced to look once each month. If the market has been particularly bad, I am often loathe to log in and download my brokerage statements for that month. For example, I downloaded my May account statements in early July at the same time as my June statements. Was a lot less bothersome doing it that way. Back in 2008, I went months without looking at my account statements. Don't see what good it would have done for me watch the carnage unfolding in real time. I mean I knew basically what was happening. Did not need the exact details to reinforce how bad it was.
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mortfree
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Re: Looking at account to get used to fluctuations?

Post by mortfree » Sun Jul 14, 2019 11:00 am

Looking at the fluctuations is a good way for me to be numb to the ups and downs.

Another thing I consider is that with each contribution in 401k depending on where the market is at, One week I might have bought 8.054 shares and then two weeks later the same dollar amount bought 8.00 shares.

retiredjg
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Re: Looking at account to get used to fluctuations?

Post by retiredjg » Sun Jul 14, 2019 11:28 am

I've done both and found both methods to be helpful.

If I were in a position to make that decision again, I'd look frequently until I no longer put much weight on the regular ups and downs.

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Cyclesafe
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Re: Looking at account to get used to fluctuations?

Post by Cyclesafe » Sun Jul 14, 2019 11:34 am

I look almost every day and have noticed that I have become numb to volatility. Numb is good.

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goingup
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Re: Looking at account to get used to fluctuations?

Post by goingup » Sun Jul 14, 2019 11:55 am

There's a concept in behavioral economics called Myopic Loss Aversion. When you peek frequently at your holdings you see lots of ups and downs. Those losses are so painful that you may decide to become more conservative than is needed. https://www.behavioraleconomics.com/res ... -aversion/

I do think the effect of peeking frequently is that you see and feel movements in the short-term, which you would have not even noticed if you hadn't been monitoring. Be aware of this. Many Bogleheads will tell you they are immune to reacting to short-term fluctuations. Maybe so. Behavioral foibles aren't always easy to detect though.

bgreat
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Re: Looking at account to get used to fluctuations?

Post by bgreat » Sun Jul 14, 2019 12:36 pm

I look once every 2-3 months - that's when I invest more money. I need the numbers for a rebalancing spreadsheet. I literally don't care about them. (If I had auto-investments I'd probably verify them soon after the buy just to verify, but I'm on manual so I verify the buys as they happen.)

I have a vague idea of where my portfolio is (total value). I know that number could be a lot smaller the next time I look at it. I couldn't care less. I don't notice small changes, I certainly was mildly amused after a 20% drop, and I haven't seen anything bigger in my life yet, but I do expect a day when I see a 95% drop (on that day I know I'll be tempted to lower my emergency fund to invest more, or sell any unneeded belonging to invest more).

I'd humbly recommend my approach. But people do sometimes consider me to be an emotionless robot. Find what suits you and what suits your temperament, but in terms of improving your returns the evidence suggests the less frequently you check the better.

Teague
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Re: Looking at account to get used to fluctuations?

Post by Teague » Sun Jul 14, 2019 12:48 pm

I don't think there's anything inherently bad about looking. If you're consciously avoiding looking you're thinking about this too much anyway. You can't avoid the daily reports of performance of "the Dow" and you will have some idea of what your account is doing whether you want to or not.

So sure, get used to the fluctuations ("flucs" for short.)
Then you may eventually be desensitized. When you see an increase in value, you can say "that change is consistent with normal variance."
And when there's a decrease, you can just say "yep, fluc'd again."
Semper Augustus

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ResearchMed
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Re: Looking at account to get used to fluctuations?

Post by ResearchMed » Sun Jul 14, 2019 12:53 pm

Teague wrote:
Sun Jul 14, 2019 12:48 pm
I don't think there's anything inherently bad about looking. If you're consciously avoiding looking you're thinking about this too much anyway. You can't avoid the daily reports of performance of "the Dow" and you will have some idea of what your account is doing whether you want to or not.

So sure, get used to the fluctuations ("flucs" for short.)
Then you may eventually be desensitized. When you see an increase in value, you can say "that change is consistent with normal variance."
And when there's a decrease, you can just say "yep, fluc'd again."
:happy

RM
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jebmke
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Re: Looking at account to get used to fluctuations?

Post by jebmke » Sun Jul 14, 2019 1:13 pm

if you know what you are invested in, you should have a pretty good idea of the volatility in your holdings based on what happens in the markets.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Doom&Gloom
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Re: Looking at account to get used to fluctuations?

Post by Doom&Gloom » Sun Jul 14, 2019 1:24 pm

I think if I were someone looking to achieve this goal that I would graph my account balances monthly (or weekly if you want to kill more time, etc). You will not only notice the fluctuations (and hopefully become somewhat desensitized to them) but also notice that your total account balance chugs along just fine despite the fluctuations.

Boglegrappler
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Re: Looking at account to get used to fluctuations?

Post by Boglegrappler » Sun Jul 14, 2019 1:39 pm

Buffett made a comment in an interview in recent years about not looking at your balances. He then clarified-----something to the effect of "There's nothing wrong with looking at stock prices. The problem is that most people think its telling them to 'do something'. "

over time, whether equities return an average of 8-10%, or 5-7%, at any given point they may be trading above or below that average, and indeed will bounce around it rather severely. You just have to get used to it and be able to stay the course.

clip651
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Re: Looking at account to get used to fluctuations?

Post by clip651 » Sun Jul 14, 2019 1:43 pm

Short story - I checked frequently in the beginning until I got accustomed to the market movements and got bored with it. I think it's good to watch early on to learn about it, but I don't think it's helpful or needed to continue to watch closely long term. More details below if anyone's interested.

When I first started investing, I read about expected volatility ahead of time, and picked my asset allocation with that in mind, using my best estimate of my own risk tolerance.

My total initial investments were much smaller than my emergency fund, so it was a good chance to watch things closely with a low overall total risk. I couldn't lose too many total dollars from fluctuations, or even from panic selling if I had done that, there just weren't that many dollars there. In the beginning, I watched the US and international markets daily (sometimes multiple times a day). I tried to teach myself to laugh at the irrationality of things being up or down for seemingly no good reason. I used mutual funds only, so I only had one account value per day. I looked at YTD performance on a watch list of Vanguard funds that I owned or was tracking for education/interest pretty much daily. And logged into my accounts regularly to watch how transactions worked, and see my actual balances. In general, I watched the market (SP 500, etc) more closely than my actual account balances, and I think this was helpful for me starting out.

401k investments are automatic, so I have no control over the timing of new money coming in. Taxable investments (small) are either manual or automatic. I would occasionally throw in a bit extra from the emergency fund to try to catch a dip (replenishing the EF soon after, basically just investing planned contributions a bit early), and/or watch for tax loss harvest (TLH) opportunities - this gave me a reason to feel good when the market was down. If the markets were up (those new highs that get hit fairly frequently) I continued planned investing. The first full calendar year I was invested, the markets went up and down and up and down small amounts, and finished the year nearly flat - all that time spent watching for whole year for a net movement of near zero aside from contributions! My first biggish dip was at the time of Brexit, and by then I was ready to TLH the dip instead of worrying.

I opened monthly statements to check for accuracy but didn't focus on details of how much the accounts were up or down each month. Having money spread across a few different accounts (401k, IRA, taxable) meant that I didn't get a total overview unless I sat down and added things up on paper or by spreadsheet, which I only did a few times a year, usually when things were up or at least flat.

After a year or two, I got bored, got used to the fluctuations and started checking much less often, though I'm still reading threads here on the forum pretty frequently. Since I have a taxable account, I still try to keep vague watch of trends to be aware of times for TLH, rebalancing, etc.

If I didn't have a taxable account, I think it would have worked OK to watch the market a lot less closely, and just put everything on autopilot. I guess I'd still want to watch enough to get used to it, though, and to be checking my gut on dips to see if I had my asset allocation correct in the first few years.

shell921
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Re: Looking at account to get used to fluctuations?

Post by shell921 » Sun Jul 14, 2019 2:20 pm

Cyclesafe wrote:
Sun Jul 14, 2019 11:34 am
I look almost every day and have noticed that I have become numb to volatility. Numb is good.
+1
except I only look once a month!

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