Ashraf always dreamt of being a doting father to his children. So much so that he always handled their problems in his own way, completed their homework, worked on their science models so that they could top their science class, and even fought with the bullies in the school for them rather than teaching them how to do it.
As these children grew up, they became too dependent on their father for every small need. They could not handle the pressure of adult life. Their emotional and mental growth stopped. By the time Ashraf realised what went wrong, it was too late. His children were lazy, anxious, insecure, and scared of getting rejected.
This is what is known as helicopter parenting - a parenting technique where parents get “over” involved in their children’s lives and end up limiting their growth. While this concept is true for parenting, it is also present in the investment sector.
Being a helicopter investor is as unhealthy as being a helicopter parent. This investment technique not only harms your funds but also your mental health to quite an extent. Confused about what we just said? Read further for a better understanding!
Signs You are a Helicopter Investor
If you check your investments too often, say daily or weekly just to see if there is any growth, chances are that you are a helicopter investor. To add to this, if you fiddle with the investment allocations every time you see a slight dip in the market, you are then surely a helicopter investor.
As this type of an investor, you tend to go emotional every time there is a slight dip in any equity that you have purchased. You, then, tend to sell such equity. And if there is a slight rise in investments, you end up purchasing more of such equities out of happiness.
How Good Is It to Monitor Investments Regularly?
It is normal if you have an urge to view how your investments are performing. However, doing it daily or even weekly for that matter is not a good idea at all. It is because frequently checking your investments and adjusting your investment portfolio for the sake of profit can often lead to losses.
So, How Often Should You Check Your Investment Portfolio?
Financial and market experts recommend that you should check your investment portfolio at least annually or once in every 3 months. And when it comes to making changes to your investment portfolio, consider scenarios where a portion of an investment you possess has risen or fallen due to changes in price, leading to the portfolio going out of balance.
Checking investment portfolios too often creates panic whenever the securities drop. Keeping an eye on your investments is crucial, but you don't have to do it very often. For many people, checking them once a week is enough, and you might even be fine without checking for a few months if you're aware of how the overall market is doing.
When to Rebalance Your Investment Portfolio?
In investing, there's a strategy called the "five percent rule." It suggests that you shouldn't put more than 5% of your total money into just one investment. Since many investments can go up and down in value, if you don't keep an eye on them over time, the amount of money you've put in each one can change a lot.
That's why it's a good idea to check on your investments sometimes to make sure they're still balanced. This is called "rebalancing" your investments. You wouldn't want to suddenly realise that most of your money, like 85 percent, is in risky tech stocks one day. So, by checking and balancing, you can make sure your investments stay in a good mix.
Rebalancing too Often is Risky Too! Find Out How!
Changing the balance of your investments too often might not be a good idea. This could lead to lower profits because it costs money to make these changes, like transaction fees. It can also put your money at higher risk and you might have to sell assets when their value is going up.
Usually, you don't have to change your investments very frequently. Each time you do, you'll likely have to pay fees for the changes. So, it's important to find a good balance. Checking and adjusting your investments once a year or every six months is usually enough.
Studies have found that the best way to balance is not too often, like every month or every three months, but also not too irregularly, like only every two years. For most people, rebalancing once a year works best.
Always remember, your investment portfolio is just like a budding individual that needs its time to grow. All it needs is an yearly or half-yearly intervention so that you can figure out if any balancing is required. After all, when it comes to your investment portfolio, striking a balance is the key.
Policybazaar UAE – Helping you navigate the wilderness of the insurance world!
Written By: Tanvi Pathak
- Latest News & Update
30 Jul 2024From Revenge Spending to Revenge Savings - A Classic Way to Move On!Discover the art of revenge savings and revenge spending on our website. Find classic ways to move on and take control of your financial future.
30 Jul 2024Save Your Emergency Funds with ‘Sinking Funds’ - A Budgeting TechniqueThis is a strategic way to manage your monthly budget by setting aside a small portion of money per month. You can use the money kept aside for buying car accessories, Christmas gifts, vacations, stationery and more.
30 Jul 2024Three Ways to Put Your Eidi Money to a Fulfilling UseOn the occasion of Eid whether it be buying new clothes and indulging in sumptuous food, it is definitely on everyone’s to-do list.
06 Mar 2024Women in the UAE Making Significant Strides in the Finance IndustryStatistics reveal that women constitute 70% of the workforce of nationals employed in the banking field in the UAE. It is noteworthy that it is by far one of the highest representation of working Emirati women across all sectors.
07 Mar 2024#Inspire Inclusion and Financial Freedom - Women’s Day 2024This year, on Women's Day, we are all about including women in finance. We cannot ignore them and we must do our best to make sure that they are financially empowered and are able to make the most of their savings.
07 Feb 2024Loud Budgeting: The ‘Gen Z’ Approach Towards Financial ManagementThis article discusses the Loud Budgeting trend and how it is beneficial for the Gen Z. It also highlights the reasons why the trend is beneficial for the common public.
