How often should you check your shares portfolio?

There is a happy medium between compulsively checking your investments several times a day, and hardly bothering to see how they are doing at all.

But financial experts warn that if you opt to invest in individual shares, you should be more proactive about checking in on them than if you hold funds.

You are in effect the investment manager, rather than delegating this to a paid professional, so monitoring company news and rebalancing your portfolio is down to you.

Stock portfolio: If you opt to invest in individual shares, you should be more proactive about checking in on them than if you hold funds

Your risk might also not be spread as widely if you hold shares rather than funds, simply because it is harder to keep on top of as many individual stocks when it is not your full-time job.

You will therefore need to stay alert for anything knocking a smaller, more concentrated portfolio off course.

So what is a sensible approach to how often you monitor your shares, and what should you look at beyond the price? The experts tell us below.

How frequently should you check your shares?

‘Investors are in for the long haul and so there is little need to be checking the portfolio on a daily basis. This can be difficult at times,’ says Richard Hunter, head of markets at Interactive Investor.

‘As investors, we cannot ignore the daily noise and nor indeed should we. It is, after all, necessary in identifying current trends affecting companies, sectors, economies and of course markets.’

But Hunter says that if you are invested in the right companies with a long-term horizon, the outcome can be measured and the portfolio left to grow – and psychological detachment is a helpful part of an investor’s armoury.

‘Perhaps taking the example of company reporting dates could be a useful comparison for checking a portfolio,’ he suggests.

‘A light touch review on a quarterly basis, a check for performance and whether the risk profile is still suitable half-yearly, and then once a year drill down in full detail.’

Adrian Lowcock, a chartered wealth manager and head of personal investing at Willis Owen, says investing in shares requires a much more proactive attitude than if you put your money in funds.

Shares are naturally more volatile, and each one needs monitoring as part of a portfolio but also in isolation, he points out.

‘With investing in individual shares it is important to keep an eye on the news flow of a company to ensure it is still meeting your expectations. That could be quarterly reports but could also include major announcements.

‘Checking in quarterly is probably a minimum requirement with the reality you’ll need to check more often and especially if there is any “news”.’

Rob Morgan, investment analyst at Charles Stanley Direct, says how often you check in largely depends on the sort of investor you are, but if you pick individual shares this commits you to being more ‘hands on’, and keeping a watch on company news and updates.

He adds: ‘For most investors who access markets through funds, a check every few months is likely to be sufficient. Investing is for the long term and it’s important not to be too reactive.’

What else should you look at when reviewing shares?

1. Rebalancing: You need to check regularly that the balance of your shares within a portfolio is correct and it hasn’t become riskier as result of movements in share prices, says Lowcock.

Richard Hunter: A light touch review quarterly, a check for performance and risk profile half-yearly, and a drill down in full detail once a year, he suggests

‘Whilst it is unlikely the overall balance changes significantly on a daily basis it is possible that a share price could fall or rise rapidly causing the portfolio to be quickly unbalanced.’

Morgan says: ‘Not having all your eggs in one basket is the foundation of long-term investing success, and it can help you successfully navigate periods of market turmoil.

‘However, asset classes perform differently in various market conditions, as do different regions and sectors over time. This means a portfolio can become out of kilter as various assets rise or fall at different rates.

‘If certain investments perform particularly well they will grow to represent a larger proportion of your portfolio and that could mean additional risk.

‘It can be prudent to bank profits in these and use the proceeds to top up in areas that have underperformed – thereby retaining the intended balance of your portfolio.

‘This needs to be looked at – perhaps once or twice a year – but in periods of market turmoil it may be beneficial to do it more frequently.’

Hunter offers the following example of when you need to consider a rebalancing exercise: ‘A strong run in your technology shares may have resulted in tech now taking 50 per cent of your allocation as opposed to the 40 per cent you had originally aimed for.

‘If so, consider selling some shares to keep the balance intact.’

2. Rationale: Think back to why you selected your shares in the first place, suggests Hunter.

‘Does the reason you bought the shares still stand or is there better value elsewhere? Are you diversified both in terms of business type and geography?

‘Are your aims, for example income or capital growth, still being catered for? Has your attitude to risk changed?

On the latter point, Hunter notes that investors typically get more cautious on the run-up to retirement, when you might want to start drawing an income.

3. Target price: ‘When buying a share it is important to have a target price that you want to achieve,’ says Lowcock.

‘It is also important to consider the downside as well so set a price when the holding should be reviewed.

‘You can often set alerts to remind you when a share price reaches a set target so monitoring can be automated to some extent.’

4. Volatility: Sudden market turmoil after a calm period can reveal just how volatile certain investments in your portfolio can be, says Morgan.

‘If this is a shock that you weren’t prepared for, it may be time to revisit whether you have too much in the most volatile assets.

‘You could add areas to diversify and help smooth out returns, though any changes should be thoughtful and measured rather than made in haste as a knee jerk reaction.

‘If you are reliant on income from your investments you will need to periodically check you are getting the desired amount or if there is likely to be any shortfall.’

5. Tax free allowances: ‘Ensure your investments are as tax efficient as possible each year and you utilise your Isa and pension allowances – ideally as early as possible in the tax year,’ says Morgan.