Hello all,
I came out of the market a little while ago and am now re-entering. I am just interested in how much people tend to invest in each company? As I re-build I will regularly put in 1k, and then add additional amounts as and when appropriate. I always wonder whether to spread each regular allocation across a balanced pf by choosing a new stock each month, or keep adding to the same stock to get to the level I am happy with holding.
thoughts?
Hello Scotty. Portfolios come in different sizes. So the best way to look at how much money to invest in a particular share is as a percentage of your total portfolio. Then it will be possible to compare small & large portfolios in the same way.
Diversification is generally thought to be a good thing, in terms of reducing risk and improving returns. So if you wanted to arrive at a folio of ten shares, then you would invest 10% of your investments funds in each company. Or if you wanted a folio of 20 companies, then you would invest 5% of your funds in each. One factor that is worth thinking about, is how much time you have conduct your analysis on each company. If you are pressed for time, then you might want to have a lower number of companies, or if you have the time & the inclination, then you might want to invest in a larger number of companies.
