Money Management

It’s important to keep tabs on your portfolio without going overboard. 

You’ll often hear that your brokerage account isn’t something you should set up and forget about. Rather, it’s a good idea to check up on your portfolio and see how your investments are performing.

But how often should you check in on your brokerage account this year? Once a week? Once a month? Believe it or not, you may want to peek in less frequently than that.

Why a quarterly brokerage account review is ideal

The stock market can be very volatile, so the value of your portfolio can swing wildly from one day to the next. That’s why checking your portfolio every day or every week is generally not advisable.

If you review your brokerage account too frequently, you may grow scared or frustrated when you see your portfolio balance continue to dip. And that might drive you to make rash decisions, like selling off stocks when they’re down and locking in losses rather than waiting things out and avoiding any sort of financial hit.

But even if you’re a seasoned investor who knows not to sell off stocks in a panic, seeing your brokerage account balance shrink from one day to the next can be very disheartening. And it can really mess with your mental health. Why subject yourself to that?

That’s why a quarterly portfolio checkup is really much more appropriate. A lot can happen in the course of a quarter, but this way, you’ll have a pulse on your portfolio without having to get too caught up in the day-to-day details.

Also, in the course of three months, the value of different investments in your brokerage accounts can change. And that could lead to a scenario where you’re not as diversified as you want to be.

If you discover that, you can make changes that lead to a better balance in your portfolio. But that imbalance may not be so obvious from one day or week to the next. Rather, it’s more likely to happen over time, which is why checking your brokerage account once a quarter is a good pace to set.

What about your IRA?

If you have separate investments in an IRA account, checking on those once a quarter is a smart move as well. As is the case with your brokerage account, your IRA portfolio could become less diversified over time, so it’s good to keep tabs on it.

But checking in on your IRA too frequently could make you miserable, especially during periods of market volatility. And since your IRA isn’t something you’ll be tapping until retirement (ideally), you don’t need that stress.

Even if you’re hoping to tap your brokerage account sooner than your IRA, you still shouldn’t make the mistake of checking in on it too often. A quarterly review should help you strike the right balance and avoid too much mental anguish during periods when the stock market is being glaringly unkind to investors and there doesn’t seem to be much of a light at the end of the tunnel.

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Is your money safe in your savings? 

Inflation is an inevitable part of the economy, and it affects all parts of life. While a moderate amount of inflation at 2% is considered healthy for the economy, inflation higher than that can be dangerous. Known as the “silent killer,” high inflation means your money doesn’t go as far and can destroy your hard-earned savings.

Keeping your money in a savings account might seem like the safest option, but it can have its drawbacks. One of these drawbacks is that your money is losing value due to inflation. This means that, even if your balance stays the same, the purchasing power of your money decreases over time. With inflation currently at 40-year highs, here’s how much money you are losing to inflation by keeping it locked away in a savings account.

What is inflation?

Inflation is the rate at which prices increase over time. It’s calculated by comparing the current price you pay for goods and services with their prices from a previous period. As prices rise, you need more money to buy the same amount of goods or services as before. In other words, your purchasing power decreases and your money is worth less than it was before.

The impact of inflation on your savings account balance

If you have been saving money in a standard savings account, you may be surprised to learn how much value it has lost due to inflation. Inflation is currently averaging 7.1% for 2022, hitting as high as 9.1% in June. Let’s say one year ago, you put $1,000 in your savings account. The average savings account is currently earning 0.30% APY, so after a year, you will have $1,003 in your account (not much!).

But with inflation running at 7.1%, you would need $1,071 to have the same buying power that you started with. This means you actually lost $68 by your money sitting in a savings account. If, for example, inflation were to remain at 7%, in five years your $1,000 saved in a normal savings account would be worth around $700 today. This money loss would only get worse over time.

Americans have lost an average of 2.52% per year in purchasing power since the year 2000 due to inflation, resulting in a cumulative price increase of 72.89%. In other words, $100 in 2000 is equivalent in purchasing power to about $172.89 today. Let’s say you bought a bike in 2000 for $100. In 2022, the exact same bike would cost close to $173. So a dollar today only buys about 60% of what it could buy back then. That means that $10,000 held over 20 years would only have about half its purchasing power left. Ouch!

How can you protect yourself from inflation risk?

If you want to protect your money from inflation, you need to invest it in something that will keep up with the rate of inflation. This can be done through buying stocks and bonds or even making real estate investments. These types of investments have the potential to earn higher returns than a standard savings account, which can help offset some of the effects of inflation.

Investing has higher risks but also higher rewards — stocks tend to yield returns that outpace inflation over long periods of time. So investing for long-term goals (like retirement) makes sense for many people who want their money to not just stay safe but also grow faster than if they kept them in a bank account. For short-term goals, however, you can look for higher-yield savings accounts. Want returns over 7% with virtually no risk? I bonds may be the answer.

Unfortunately, keeping your money in a savings account doesn’t provide nearly as much protection against inflation as other investment strategies. Due to inflation, the average Social Security beneficiary has lost close to $6,500 in annual purchasing power since 2000. It’s important for savers to understand how much money they’re missing out on due to inflation when keeping funds idle in bank accounts. Although inflation is an unavoidable part of economic growth, there are ways to minimize its impact on your finances. Researching different investment options can help ensure you’re getting the most out of your hard-earned dollars.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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This may be the last of state stimulus checks. 

It’s been nearly three years since the U.S. economy went into full shutdown. We knew very little about COVID-19, but many of us knew someone who died of the virus. Those who were able worked from home, and millions of us became accustomed to wearing pajama bottoms to Zoom meetings. Those who did leave the house to work were faced with the awful possibility of becoming ill.

As more businesses shuttered and unemployment rates soared, the federal government realized that COVID-19 had the potential to send the economy into a deep black hole. By March 2020, the CARES Act was signed into law. As part of that act, the majority of Americans received a stimulus check directly deposited into their bank accounts or via mail.

States also received stimulus funds. In all, the federal government sent three rounds of stimulus to the American people. When it became clear that no more checks would be forthcoming, some states decided to step in, sending funds to state residents.

Some of the following states began distributing stimulus checks in 2022. However, millions of residents have yet to receive the funds for various reasons. If your state is listed, check to see if your situation fits any of these scenarios.

California

The state of California reports that most relief payments of up to $1,050 were paid out by the end of 2022. However, about 5% will not be sent until Monday, Jan. 16. The amount received is based on a combination of income, the number of people in your household, and tax-filing status. As long as you are single earning less than $250,000 annually or a couple earning less than $500,000, you can expect to receive between $350 and $1,050.

Colorado

In Colorado, it’s state residents who requested an extension to file their 2021 tax returns who are due to receive stimulus funds by the end of January. Single tax filers can expect $750, and joint filers are due $1,500.

Idaho

In 2022, Idaho legislators approved a special session rebate. By the end of March, taxpayers will receive $300 (for single filers), $600 (for joint filers), or 10% of their 2020 income tax liability — whichever is greater.

New Jersey

By the end of May, 2 million New Jersey residents are due a property tax rebate. Homeowners earning up to $150,000 qualify for $1,500, while homeowners earning $150,000 to $250,000 can expect $1,000.

New Jersey is not leaving renters out of the loop. Renters who earn less than $150,000 are due $450.

Pennsylvania

Beginning Jan. 19, 2023, older and disabled Pennsylvanians can apply for rebates on property taxes and rent paid in 2022. The state encourages applicants who are able to use myPATH to submit their online applications. The maximum rebate is $650, but a supplemental rebate for qualified homeowners may boost that amount to $975.

South Carolina

South Carolina residents who filed their state income tax returns after Oct. 17, 2022 (but before Feb. 15, 2023), are due to receive a refund check of up to $800.

Who could have imagined that stimulus checks would be a topic of discussion nearly three years after the IRS sent the first check? The fact that states have determined that a need remains underscores the economic impact of the pandemic.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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