Behavior #6: Measure infrequently

Wealth

Jan 16

There will come a day when you’ll need to know your investment balances.

If your bills are paid, your emergency fund is intact, and your automations are in place, that day is not today.

Looking will not increase your wealth. It will not give you serenity, and it will not provide you with some precisely-timed piece of information that will illuminate your future investing path. Instead, it will either make you happy (should your balances be up) or sad (should they be down), and you will act accordingly — emotionally rather than rationally. You will spend when you should save, you will hold back spare cash when you should be investing, or you will alter your strategy when no change would continue to provide the returns you need.

Looking will also give you a distorted perspective on progress. Like fitness results, investment returns are best seen over decades. Daily or monthly examination of your investing balances is akin to looking in the mirror after every workout; seeing little or no change, you misinterpret the non-result as indications that progress is not being made, or worse, you mischaracterize minor fluctuations as major events and stray from the righteous path.

Instead, do not to look. Be content in your knowledge that today’s needs are met, and tomorrow’s are best guaranteed through actions you’ve already taken — living below your means and investing regularly and automatically. Forego the dopamine hit of opening your statement or logging in, fail to look in the “investment mirror”, and go find another activity to occupy your time.

If you find that you genuinely need to know your investment balances, it should be because you are changing your allocations due to impending retirement or are experiencing a large financial need that exceeds your current income and emergency cash reserves — truly extraordinary circumstances that should occur only once or twice in the lifetime (typically when one buys a house or is distributing assets to one’s heirs). During these events, you are free to measure your net worth — especially since in one of these cases, you’ll be dead.