Why Daily Portfolio Checks Undermine Long-Term Returns

For many investors, checking their portfolio has become a daily ritual. Constantly tracking market movements can trigger emotional decisions that hurt long-term wealth creation. Shivam Pathak, a Certified Financial Planner, posted on LinkedIn that the first thing many investors do after waking up is check the market or their portfolio. If the portfolio is green, the day feels good. If it is red, the mood changes completely. This habit can quietly affect financial decisions.

Many investors entered the markets after the strong post-COVID rally, expecting similar returns to continue. Pathak told Mint that someone who started investing just two years ago may have entered the market with very high return expectations. When markets later go through a phase of modest gains or little growth, it is natural for such investors to begin questioning whether they made the right investment decisions.

The Performance-Chasing Trap

When investors see their portfolio not performing as expected, they often move from one asset class to another in search of better returns. Pathak cited a concrete example: in recent months, many investors shifted money from equities to gold, then to silver, and later to other funds or asset classes based on whichever investment had delivered the best recent returns.

This performance-chasing behavior often leads to poor timing, causing investors to miss future gains and, in many cases, suffer significant losses. Pathak says that when investors check their portfolio too frequently, they may start reacting emotionally instead of following a proper plan. In investing, emotional decisions often hurt long-term returns.

The Mechanism of Emotional Decision-Making

The psychological mechanism is straightforward. Frequent portfolio checks amplify the emotional weight of short-term volatility. A 1% daily move feels significant when checked every morning. Over a 20-year horizon, that same move is noise. The brain's reward system responds more strongly to immediate gains and losses than to abstract future outcomes. This is known as hyperbolic discounting in behavioral finance. Daily checks feed this bias directly.

The Cost of Switching Asset Classes

Each switch between asset classes carries transaction costs, tax implications, and the risk of buying high and selling low. The investor who moved from equities to gold in early 2024, then to silver, then to another fund, likely locked in losses on each transition. The compounding that would have occurred from staying invested in a diversified portfolio was interrupted. Pathak's observation that this behavior leads to missing future gains is supported by a large body of academic research on return chasing.

A Smarter Review Cadence

Instead of tracking portfolio performance every day, investors should review their investments periodically–such as once a quarter or during their annual financial review. Regular portfolio reviews are important. They should be focused on whether the investment strategy remains aligned with financial goals rather than on short-term gains or losses.

What to Check During a Quarterly Review

• Asset allocation drift: Has the equity-to-debt ratio shifted more than 5% from the target?
• Goal alignment: Are the investments still appropriate for the time horizon of each goal?
• Cost structure: Have expense ratios or advisory fees changed?
• Rebalancing need: Does the portfolio need to be rebalanced back to the target allocation?