How much do you invest per buy?

[mattyRK]

Hello,

I think this may be my first post and if so, hey! Great forum. Just have a question for you brilliant people.

A bit of a background of me. I'm 22, a commerce student (finance and accounting) and somewhat new to the equity investment game.

Because i'm a student, i'm not taking in a massive income but I try to invest as much as I can into companies I feel myself I should invest in. Not looking at trading just yet just capital growth.

Because I don't earn a massive amount, i'm putting about $1k into each buy (so for the pricier stocks i'm only acquiring about 25-35 shares per buy)

My question is this. Is this bad? Should I be waiting until I have more capital and then make a big buy? Should I sacrifice a bit of diversification and save a bit more and invest a larger amount when I buy into a company?

Sorry if this is a bit all over the place.

tl;dr. Is 1000$ too little to have invested in a company? Should I be saving more and investing more capital into a company when I buy?

Thanks gang!

 

[burglar]

... Because i'm a student, i'm not taking in a massive income ...

Hi matty,
Welcome to ASF.

It's a self answering question, is it not?
You say your financial situation is such that you are putting $1k into each buy.
The only thing I can add is, that the second buy is in the same company.

That way the brokerage won't entirely rule your trade.

And please do search the forum ... a lot has already been written on the topic.

 

[qldfrog]

I alwqays try to put at least 2k per trade:
paying $10 to buy and $10 to sell, my brokerage fees are 20$ for a $2000 lot-> 1%;
As I trade a lot, playing with smaller packet would make the broker fee too high in %
just my 20c;

 

[mattyRK]

Thanks for the responses guys!

burglar - you're right. It is very much a self answering question when I reflect on it. I am kinda diversifying a bit because my current portfolio is pretty overpriced and I would prefer to let things settle a bit before I add to my current holdings to avoid buying over priced stocks obviously.

qldfrog - thanks man that seems a good way to go, especially how i'm paying a bit more in brokerage costs by trading with CommSec.

(btw def will use search function next time )

 

[So_Cynical]

4K Typically but experimented with 5 for a while and 7 for about 12 months coming of the last top...bad time to do that.

 

[burglar]

... I am kinda diversifying a bit because ...

Diversifying is double edged ...

 

[pixel]

Welcome to AFR, matty;

If you're serious about investing, get a grip on position sizing and risk calculation.
Capital preservation is far more important than other people's ideas of quantities.

The Trading Method that I employ and that makes up my Trading Plan, comprises several steps:

1. Identify stocks that have a high probability of breaking to the upside.
2. Calculate the start position size in such a way that a failure to perform does not hurt more than I can afford.
3. Estimate a target zone, but keep a close eye on the stock regardless.
4. Have the unemotional mind to realise signs of reversal, and the discipline to stop out in time.
5. Don't lose sight of the individual properties of a stock - its "DNA" - and the specific price and time range that I bought it for.

 

[mattyRK]

Welcome to AFR, matty;

If you're serious about investing, get a grip on position sizing and risk calculation.
Capital preservation is far more important than other people's ideas of quantities.

Thanks!

Definitely will do.

Cheers for the responses guys!

 

[ROE]

If I am not 100% sure on a stock after research
I load up 10k worth, if I am 20k plus
Each subsequently one of the same
Stock 10k plus...the unsure stock of 10k
Initially purchase If there are more information
I manage to get access to after the purchase
That give me reasonable confident I then double up
And buy 20k plus more

Absolutely minimum for me is 5k ..mainly specs..
good cash flow stock That pay dividend minimum
10k I don't Buy below 5k worth, not worth my time
researching, force me to research and commit
To a particular business..

I only ever own 15-20 stock at a time through bear and bull market..

 

[So_Cynical]

I am kinda diversifying a bit

Diversifying is double edged ...

I would argue that the positives out weigh the negatives, especially for the more financially conservative investor, with a long term strategy...big diversified portfolios are busy, always something going on, share buy backs, cap raising's at steep discounts, Share purchase plans, take overs, special dividends, return of capital, splits, floats, bonus share issues and options...etc.

 

[Julia]

To hold the discussion in dollar terms seems a bit unreasonable to me. Surely a % of available investible capital would make more sense. Some people will have a base of several million and others less than $5,000. So to discuss how much in dollars anyone would invest seems a bit meaningless to me.

 

[burglar]

To hold the discussion in dollar terms seems a bit unreasonable to me. Surely a % of available investible capital would make more sense. Some people will have a base of several million and others less than $5,000. So to discuss how much in dollars anyone would invest seems a bit meaningless to me.

Agree completely, Julia!

matty has already described his position as one of someone starting out.

The dilemma is real, take a risk, or spread yourself thin.