Dangerous thinking when watching net worth

[Katsmeow]

+1
I just look once a quarter to update the spreadsheet that I have been keeping for the past 20 years. When I see quarterly gains it doesn't tempt me to spend for some reason. I guess it feels like a long term gain and so doesn't impact my short term spending urges.

I would suggest that it is imprudent to only check your investments once every 90 days. What if someone improperly gained access to your account and stole your money? What if the entity holding the money in error, debited money from your account, or sent your money to someone else?

Yes, yes, yes. I understand that those things are uncommon, but they do happen.

For example, there is the recent thread regarding someone's friend not checking his bank statements for months and $35k vanishing from his account and much of it the bank need not replace because he didn't notify the bank within 60 days.

Personally, I check my investment accounts on a near daily basis. I don't dwell on how much it has gone up or gone down, but I do make sure it is all there and that there have been no unauthorized transactions.

 

[NW-Bound]

Good point! I wonder if the brokerage is liable only for losses within 60 days, the same limit as for banks.

Some people advocate looking at investment accounts or 401k as infrequently as once every 6 months or a year, only to rebalance. What if you have nothing left to rebalance?

 

[NW-Bound]

I thought about that in the 2000 crash - I said 'heck, a nice car does not depreciate as fast as my stocks just did!'

-ERD50

Back then, both my wife and I were not thinking about ER. I remember distinctly her lamenting to me that with the money lost, we could have upgraded to a nicer home. And as it further developed, the money lost from 2000 to 2002 could have bought us 2 more homes like the one we had, and still live in today. Maybe it was 3 more homes, as the housing bubble did not develop until after 2002.

 

[GalaxyBoy]

I watch the sum of my retirement accounts go up and down and keep telling myself I shouldn't do it. But when there's a good "up" day I tend to think how my RE date just got a bit closer rather than feeling I can blow a few thousand dollars.

 

[athena53]

I keep a spreadsheet that tracks net worth and save the values as of the first of every month. If the market is going up, I tend to update it more often, but only the past monthly values are saved.

I have to admit that the good market of the last few years WAS a factor in my deciding to retire rather than seek a new job when I left my last one, and I'm encouraged that our YTD net gain is about 3 X what I think we'll need to pull out by year end. Having seen large chunks of it disappear on the financial crisis, though, I'm still cautious.

 

[Fermion]

Good point! I wonder if the brokerage is liable only for losses within 60 days, the same limit as for banks.

Some people advocate looking at investment accounts or 401k as infrequently as once every 6 months or a year, only to rebalance. What if you have nothing left to rebalance?

But how exactly do you prove it was not you who logged into your account and bought 10000 call options for Twitter at a $90 strike?

A hacker could do a lot of damage that might be hard to reverse.

 

[NW-Bound]

I do not know if brokerages log IP address associated with each transaction or not. Or even if they do, is it still your fault for not protecting your account? So you do raise a good concern there.

Still, if you discover that 10000 option purchase right away, you can sell quickly and only lose the spread. Or maybe you see that it's now in the money, and decide to ride it out and thank the hacker for allowing you to ER?

Anyway, this has happened in the past. A hacker broke into an investor account and used it to buy some penny stocks, which he was probably selling on his end. The police was alerted and caught him. This was more than 10 years ago.

 

[MRG]

I get an email with every order placed. If they turn that off, I get an email. If they change the email address, I get an email plus snail mail.

 

[kaudrey]

Like some others, I only update my NW totals monthly.

But, since my goal for that net worth is FIRE, a larger number makes me feel happy that we may hit our number earlier than currently projected; but, this doesn't make me want to spend more - it's almost the opposite. If we did that good during that period, imagine what we could have done if we saved EVEN MORE!

 

[sanfanciscotreat]

Check the markets and investments daily, but changed from monthly to quarterly for the record books to reduce noise. Thankfully, the quarterly NW has been increasing steadily since retirement more than four years ago. I know there will be a downturn periodically, but hopefully not like 08. Will have to take SS and RMDs in a couple of years and need to get some more of my former employers stock sold before then and get into higher yield.

 

[Andre1969]

I check my investments daily as well, but, like others, only record one day of the month...the last day. A few years back, I used record the extremes. For instance, if June 24th was the best day of the month, and happened to hit a new high, I would use that day's data for the month, rather than the last day of the month. But, if it happened to be a bad month, I'd pick the worst day of the month and save its data in my spreadsheet. The one exception was December, where I'd use the value on the last trading day of the month.

But, in 2011, September I think, I decided to just start using the last day of the month. It's simpler that way, and tends to smooth out the peaks and valleys a bit.

 

[photoguy]

I think I have the opposite problem as I keep thinking wouldn't it be great if I just had x% more. Already "upgraded" several times.

 

[jollystomper]

I do look every couple of days but am not tempted to make a decision based on a single day's gain or loss. Most of the "toys" I desire I could get regardless of those daily fluctuations - the bigger issue is more "do I*really* need it" and "will I have the time to spend with it".

For trends I prefer looking at the month end values. I always look at my totals and ask the question "If I lost 15% of this, could I still sleep at night?" I'm fortunate that I can answer yes to that question these days.

 

[kcowan]

When we first retired, I checked daily and updated monthly. Now after 12 years, I update half-yearly and report the 6 month results to DW. I check my stock portfolio more often, maybe weekly. I get email notifications for all orders.

So I don't spend based on results. But when the portfolio is buoyant, I will relax a little when DW wants something new.

 

[scrinch]

I would suggest that it is imprudent to only check your investments once every 90 days. What if someone improperly gained access to your account and stole your money? What if the entity holding the money in error, debited money from your account, or sent your money to someone else?

Yes, yes, yes. I understand that those things are uncommon, but they do happen.

Good point. Maybe I should check monthly, but only record the results quarterly. Even monthly I doubt I'd be tempted to change spending habits much, whether the balances are up or down.

 

[unclemick]

Hmmm - this year my taxes are more than my yearly expenses early in ER (1993 and later). Good old RMD. After 20 yrs I reached my 70's.

No heirs, I can't take it with me, Loosen up and strangle 'cheap'.

I must, I must!

heh heh heh - to prevent 'looking at Mr Market too much' full auto Target Retirement with auto RMD, fed and state tax auto withhold, and sweep the rest to MM account. Which I'm trying to spend more - remodeling some more and traveling a little higher on the hog.

 

[brett]

I look at the number every quarter, but have a much better look after YE.

I have a very hard look every November in preparation for tax time/tax planning.

 

[Willers]

I see my NW every day since Quicken updates my fund values with a click of a button. Changes in NW have never prompted spending for me since until I'm above my target I only see it as "below" my goal. Maybe that will change once I'm there. I will sometimes mention to the dear wife that we "won" $10K or $20K today, but also that we've "lost" the same another day. I actually think making light of it makes the ups and downs less bothersome now that the daily changes can be more than some of my past annual salaries. Also, I think it actually discourages me from spending because I don;t want to lose the momentum.

I do check all my accounts monthly for the reasons mentioned. I am a little concerned about an account being hacked. If a CC gets hacked, it's a hassle but not a life changer. A Vanguard account breach would be a very different story...

I do also have a NW graph/sheet that I update at the end of every year to remind me of the progress we've made. I enjoy looking at that each year. I reminds me why I've worked so hard on this. It also reminds me that 2008 happened...

 

[racy]

The described wealth effect is great for the economy. Go buy that toy, it's makes you a good American.

+1 Might as well take some of the paper gains and turn them into something solid to play with, while you have the chance.

 

[Turboslacker]

Was weekly when using Quicken on PC. Now daily since switched to Mint on my smartphone.
Easy and quick to see NW, investment totals, activities in checking acct and credit accts.


Sent from my iPad using Early Retirement Forum

 

[foxfirev5]

When net worth is up I worry that the next fall is right around the corner. And when it's down I tighten further.

 

[Backpacker]

I watch the sum of my retirement accounts go up and down and keep telling myself I shouldn't do it. But when there's a good "up" day I tend to think how my RE date just got a bit closer rather than feeling I can blow a few thousand dollars.

+1.

I am guilty of this as well. I am getting very close to my "number". So very tempting to start feeling over confident. Scary... As I approach the number I now am thinking a bigger number may be in order. OMY syndrome here I come


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[audreyh1]

This is one reason I use a fixed % of portfolio at the end of each year as our withdrawal amount. At the end of a good market year we end up withdrawing a higher $ amount. I always figure that things could go "poof" over the next year, so better to withdraw more while the market is high.

 

[mpeirce]

This is one reason I use a fixed % of portfolio at the end of each year as our withdrawal amount. At the end of a good market year we end up withdrawing a higher $ amount. I always figure that things could go "poof" over the next year, so better to withdraw more while the market is high.

I also base next year on the previous year's asset base, but with a twist: I only go up or down 50% of the amount called for.

So if this year the budget was $100,000 and next year the budget base on strick percentage would be $90,000 I set it at $95,000. Likewise when things go up, say, $100,000 to $110,000, I set next year's budget to $105,000.

This dampens the highs and lows (spending based on a simplified moving average, like most endowments).