Experts suggest the best way to manage money: hold it for the long term and reduce frequent operations

Experts suggest that the best way to manage money is to hold it for the long term and reduce frequent operations. (Bloomberg)

[Financial Channel/Comprehensive Report] If you want to make money by investing, frequently watching the market and entering and exiting the market may not be the best way. Financial management experts pointed out that a widely circulated Fidelity study many years ago examined thousands of securities accounts and found that the accounts with the best performance were those whose holders had passed away, followed by those who had forgotten their passwords. The key behind this was to operate less and not panic, so that the investment would have time to achieve compound interest effects.

An article by financial planner Andrew Rosen published in the American financial website "Kiplinger" pointed out that a widely circulated study by Fidelity many years ago examined thousands of securities accounts and their returns. Anecdotal conclusions showed that the best-performing accounts were those whose holders had passed away, followed by those who had forgotten their passwords.

Rosen believes that this result may seem surprising, but it is completely logical. Investors who do not actively manage their accounts will not panic sell because of market declines, nor will they try to seize the right time to enter and exit the market, nor will they interfere with the continued compound interest effect of their investments.

He said that similar phenomena can also be observed when actually working as a financial consultant. Some investors are highly involved in investments, frequently discussing the market, predicting market trends, chasing promising industries, and constantly adjusting their investment portfolios; others may not check their accounts for months and only follow the original investment plan. On the whole, investors who are highly involved and operate frequently are often inferior to those who generally let things go.

Rosen pointed out that historically, the market's average annual return rate is about 10%, with gains occurring in about three out of every four years. Even in the last year of gains, retracements during the period are normal. The investment market is inherently volatile, and the real problem lies in how investors deal with it.

However, he also emphasized that ignoring investment entirely is not the right answer. Investors should still take control of their portfolios and ensure that asset allocation is consistent with long-term goals, but adjustments should be occasional and strategic, rather than reacting immediately to news or market fluctuations.

Especially after entering the retirement stage, if you panic sell due to market declines, abandon your original withdrawal strategy, or even pursue unfamiliar high-yield investments, you may cause long-term damage to your retirement assets accumulated over decades.

Rosen believes that investors do not need to truly "reincarnate" to obtain good long-term returns, but they can learn this investment method: continue to stay in the market, restrain the urge to operate frequently, and reduce the interference from short-term market noise.