How can I decide how many units of a stock/ETF to buy? - Seedly
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Anonymous

Asked 3w ago

How can I decide how many units of a stock/ETF to buy?

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Lok Yang Teng
Lok Yang Teng
Top Contributor

Top Contributor (May)

Level 9. God of Wisdom
Answered 3w ago
  1. Comission/other related fees

If fees are at a minimum of $10 per transaction, it would not be cost effective to just buy 100 (or even lesser) shares, more so for shares with low price.

If the stock you want to buy cost $1 each ($100 in total), your fees will be at least $20 (buy and sell) and you will need more than 20% gain just to break even.

  1. Portfolio Allocation

It depends on how much weightage you want the particular stock to have in your portfolio. The higher the weigtage, the more you invest in. It is important to note while you may be able to afford a lot of units for a particular stock/ETF, it is not advisable to focus into few stocks. Diversification is also an important element factor to in.

  1. Capital

The more intial capital you have, the more units you can afford. If you are unable to afford buying the particular stock/ETF at a cost effective quantity, you can delay your purchase until you accumulated enough cash.​​​

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Matthew Tan
Matthew Tan, Incoming Undergraduate at NTU
Level 5. Genius
Answered 3w ago

Determine your total investment capital and then buy according to the asset allocation you have chosen.

For eg if you have $10000 and decide on 2 etfs with a 50/50 split, take $5000/etf price

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Boon Peng
Boon Peng
Level 6. Master
Answered 3d ago

Actually there are platforms out there that will determine the number of ETF units to buy given your capital. In other words, they will do the calculation for you.

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Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered 2w ago
  1. Max X% of your overall portfolio for each stock

  2. Transaction fee is at most Y% of your cost basis for each transaction

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The Growth Hunter
The Growth Hunter
Level 3. Wonderkid
Answered 2w ago

Commission is something to take into account of, especially with a smaller portfolio.

You may look to discounted brokers like Interactive Brokers where trades in US/HK has commissions starting from $1 only, as compared to in SG, where commissions could start from $25.

There are 2 ways to position size:

1) For an investor, set the number of stocks u will hold as a maximum in ur portfolio. E.g 10 stocks.

With $10,000, each stock will then be allocated $1k each. Take $1k and divide it by the share price and you will know how many stocks to purchase.

2) If u are more active or a trader, usually the portfolio sizing is done based on the risk.

E.g: if risk per trade is 1% of $10,000 portfolio i.e $100

You can take $100 divide by the difference between the price you enter and the stop loss price.

Hope that helps!

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (May)

Level 9. God of Wisdom
Answered 3w ago

By withholding greed, but acknowleding that passive stock indexing is the superior choice for retail investors..

may be of help?, think all for Yourself:

https://seedly.sg/questions/what-is-your-general-investing-philosophy-strategy

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

3w ago

You can buy as much as you decide on your available cash money
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

3w ago

Sorry for "Read", I mean it's all written up in that link