What should you know?
In the near term, investment performance is impossible to predict. In moments of uncertainty, we sometimes see significant changes in share prices on a day-to-day basis – commonly known as “volatility”.
However, when we zoom out, we see that markets actually follow a very consistent and fairly stable longer-term trend.
The graph below shows the daily performance of the S&P 500 vs the trend at 5-year intervals:
Why should you care?
Regularly checking the value of your investments can be stressful and a cause of unnecessary anxiety. It also significantly increases the chances that you will be tempted to make harmful, reactionary decisions.
The far healthier approach is to tune out of the short-term ‘noise’ and check the value of your investments only occasionally.
The outcome is the same but the experience is a whole lot calmer.
