facebookHow many shares per stock should I buy, if I were to diversify with 10 stocks in different sectors for buy and hold investing strategy? - Seedly

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Zaid Zed

Investor/risk management at financial firm

23 Jun 2020

General Investing

How many shares per stock should I buy, if I were to diversify with 10 stocks in different sectors for buy and hold investing strategy?

Discussion (2)

What are your thoughts?

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You should put about 10k cash per stock. As stocks have different prices, you will buy different amounts. In terms of transaction costs, it is most value for money around 5-10k.

I recommend the upper end because by the time you are holding on to 10 stocks of different sectors, your portfolio should be about 100k. Any less and it's not worth it.

Let's say you take the lower end of 5k per stock or 50k. If any of the stocks make a gain of 10%, how much do you earn? For the effort made in researching and investing you earn $500 which i'm guessing is less than what you save a month, if you can afford to have a 50k portfolio.

HOWEVER, even with 100k, I find that a 1k profit for a 10% rise in a single stock is quite little, so i'm planning to pare back to maybe 5-6 stocks concentration, exclusive of ETFs and Roboadvisors that i'm also holding.

For the amount of time spent researching, I would expect at least a 2k return within a year, so you can reverse calculate how much I plan to put in one stock and extrapolate to 10 stocks for the entire portfolio.

Do not buy single stocks,

with one or two good passive indexing ETFs

you'd have 50 to 4000 or so stocks in just 1 investment vehicle.

We often think we could beat the market with 'stock picking',

something even professionals do not succeed in (W.B. etc.), however.

Magic Realism.​​​

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