Investing in ASX shares can be a rewarding, lucrative and downright fun pursuit. We all know the long-term benefits to one's wealth that share market investing can facilitate. But as with many pursuits, there is a right way to manage your investments and a wrong way.
One of the most common mistakes I see investors make is getting 'too into investing'. Checking your brokerage account multiple times a day is a sign that you might be addicted to investing.
Some people might think this is a good sign, albeit a little obsessive. But I don't believe it is. In fact, it's a warning sign that an investor could be on a dangerous path. So let's talk about three reasons why checking your investments constantly is a bad habit.
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3 reasons why you should avoid checking up on your investments too much
It's stressful
The stock market is a place where weird and wonderful things happen. But it is also a place where irrationality and emotional decision making is often on display. This makes the markets almost impossible to anticipate and explain, let alone plan for. Attempting to understand the market's short-term gyrations is a fool's errand. As such, you can see why constantly checking up on the markets can add a lot of stress to one's life.
Yes, shares go up and down all day. But watching their every move will cause nothing but stress. You can't influence what the markets do, so perenially watching their erratic moves has no upside. As Warren Buffett says, the market is there to serve, not inform.
It will cloud your judgement
Watching the markets constantly will likely do more harm than good to your investing practice. In fact, it will probably lead to you making poor investment decisions that you would otherwise not make. When you invest for the long-term, you are hopefully finding a good quality company and paying a good price for it. So if you have done this, what is the point of checking up on your company's fortunes?
If the price rises, you might feel like a fool for not buying more, and this might lead you to chase your shares up by paying more than you should for them. Conversely, if your investment falls in value after you buy it, constantly looking at it could encourage a desire to sell, and 'buy back in at a better price'. Both of these paths could lead to financial ruin, so it's best to just 'set and forget'.
Watching your investments is a waste of time
If you bought a house, would you spend the first year after you bought checking the property market to see how much it is worth? Probably not – it would only cause unwanted stress while changing nothing about your purchasing decision. Yet that's exactly what constantly checking up on your share portfolio represents.
If you want to spend time on your investments, reading your companies' annual reports, working out how much you are willing to pay for new shares, or searching for new companies to invest in is a good use of time. Constantly watching stock price movements on your existing investments is not.
