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New Year’s Resolutions: Read your monthly account statements!

I freind once told me he doesn’t read his monthly investment account statements because he doesn’t want to micro-manage his account. His investment goals are long-term, and if he gets too wrapped up in day-to-day or month-to-month changes in his account value, he tends to make rash decisions.

I understand the point he was making, and it is good to know yourself and how to control potential bad investing impulses. However, I do think his solution was flawed. If you only check in on your account once or twice a year, you are not only making yourself more vulnerable to fraud, but you might also miss administrative errors in your file which may be costing you money. I have worked in brokerage firms. Mistakes happen. Sometimes they are caught and fixed immediately by staff, sometimes they are not. It is the client’s responsibility to monitor their statements and report errors.

If you are not in the habit of reading and reviewing your monthly investment (or banking) statements already, we suggest you make it one of your 2011 resolutions. If you find the statement confusing, ask your adviser or their assistant to walk you through the document. Make notes. Then file each one and compare month to month. If you are confused by changes, call your adviser for clarification. Don’t panic, but take the time to discover what is happening and why.  Your goal for 2011 should be to gain a better understanding of your portfolio, and how it is helping you to reach your goals.

While my friends solution to his panicking may have made him feel better, it also put him at greater risk. In the end, if this process upsets you too much, it is probably a good sign that you are invested in products too risky for you, and you may want to make changes.

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