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It’s great to contribute to a retirement account on autopilot. However, this does not mean that you do not need to monitor your investments.
one in Linkedin In the post, Suze Orman highlights the need to examine your retirement portfolio at least once per year. This is important, he said, because investments change over time – which may go unnoticed.
For example, he said your target portfolio might be 70% stocks and 30% bonds/cash, but the mix might shift to 80% stocks and 20% bonds.
He said, things like this are normal. This would simply mean that you need to rebalance, which you can do within your IRA or 401(k) without being taxed.
Of course, this is just Orman’s opinion. GOBankingRates contacted two financial advisors to get their opinion on the matter. Here’s what they had to say about how often you should check your retirement portfolio.
Checking once a year is enough
“I generally agree with Suze Orman’s view that retirement portfolios do not need to be rechecked frequently,” said Hardik Patel, founder and financial advisor of . reliable path money management. “For most investors, reviewing asset allocation once a year is sufficient and often healthy from a practical perspective.”
Checking retirement portfolios more than once a year can lead to unintended consequences like overtrading, higher transaction costs and unintended tax consequences — especially in taxable accounts, he said.
“Frequent monitoring also increases the temptation to react to short-term market movements, which can undermine long-term retirement goals,” he said. “The annual review allows investors to focus on strategy rather than market noise.”
To simplify matters, he prefers to focus on asset allocation categories rather than absolute goals.
“For investors in the accumulation phase, rebalancing can be controlled by directing new contributions or reinvesting dividends and interest toward less weighted assets, while avoiding unnecessary trading,” he said. “For those in retirement or devalued, overweight assets can be withdrawn, which will lead to re-trading and cost reduction.”
Ultimately, less frequent monitoring, coupled with deliberate, disciplined adjustments, generally leads to greater success than constant investigation and response, he said.
Don’t check frequently until retirement is near
In general, it’s ideal to check your retirement portfolio less frequently, said certified financial planner (CFP) and managing member Joseph Baughan. Parkmount Financial Partners. Many people check their retirement portfolios daily or even multiple times per day – which may cause them to make emotional decisions based on market fluctuations.
He agreed with Orman that having a disciplined process to check and make necessary adjustments according to historically valid investment advice is a sound approach.
“I thought I’d add to his post that it’s better to check in (and) adjust more often for people who are near retirement or in retirement,” he said. “This is because people need to manage more risk by rounding out their portfolios and actively planning for income or needing to review different tax planning opportunities to generate that income.”
Even following this approach, if adjustments are made correctly, he said it’s not necessary to check your retirement portfolio more than two or three times per year.
Editor’s Note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including possible loss of principal. Always consider your individual circumstances and consult a qualified financial advisor before making investment decisions.