New investor here, love the app. What would you recommend a new investor hold in stocks, how many is managable to someone new. Looking for longish term growth, maybe dividend stocks and maybe a couple of speculative stocks too!
Thanks for any help
There’s no good answer to this in my view. You should take whatever the market is offering you in terms of value and nothing else.
Suppose that today it’s offering value on stocks A,B, and C. Like a good investor, you go buy them. Maybe next month it’s not pricing A,B,C so attractively but it is offering value on C and D.
What will you do? Will you buy A,B,C again to keep the number of positions manageable? That sounds like a bad idea – they’re overpriced now. Will you buy nothing? That doesn’t seem great either – you can’t make money by not doing anything. Will you buy C and D and push the number of your positions up? Seems to me like you should do this.
My conclusion from this is that it really doesn’t matter how many positions you have if you’re in for the long term. Buying stuff at the right price is much more important. Ignoring opportunities to keep your position numbers down or buying stuff at the wrong prices because you already own it is going to lose every time to having more positions bought at the correct prices.
Check prices and make sure you are buying at a good price and that there is no bad news on the stock you are buying if possible.
5-10 is a nice manageable number to start with.
If you want to dip your toe, have a look at some ETFs, such as VUSA.
ETF’s tend to move a lot less than individual stocks, but allows you to watch the market and get a feel for things.
Better to keep track of a handful of stock than be overloaded with 20+ and lose grip of news events etc for each.
To sum up, id recommend you use the demo account to create a watch list of stocks your interested in, and once happy buy them on the real account.
thank you for your advice, all great advice.
thanks very much, all help taken on board!
I read a book of quotes from Warren Buffett who compared owning stocks to owning animals. He said if you end up with 50 stocks for example, you are basically running a zoo. He recommended 12 stocks as a number the typical investor should aim for as this will allow you to care for them adequately, i.e. follow the news and business developments of the companies in question.
Number of stocks depends on your “Circle of Competence”. For instance if you’re able to track 1 or 2 company in detail and go thru all their financials and have a good insight into company then stick to those 1 or 2. You should only own what you understand and are able to keep up with.
Like @adm suggested start with ETFs then work from there. I have 4 ETFs and 10 individual stocks all together. Not planning to include anything else anytime soon, or maybe ever. I’m familiar with what I own and can track them, however, adding anything else regardless of how good they might be would be too much for me…
it’s all about risk, if your risk level is super high then you could buy one stock, if it’s low then buy 50 stocks. (or etf) Understand your own risk level to help yourself decide.
I mean you could pick 50 shockingly risky stocks, or 5 low risk like FAANG (I actually wouldn’t pick Facebook though as I can’t see it lasting but plenty of blue chip that could take a meteor hit or zombie outbreak and still keep ticking)
I’m a strong believer in not over diversifying and picking just the strongest stocks you know inside out, and are part of your life helps.
5-20 is my general recommend, I haven’t got time to do enough continued DD on more than that. I’m usually holding about 3-10 but that changes weekly as I like to swing trade a few P&D stocks high risk high reward (more than 5 of those at once and it’s too easy to make a mistake)
Sure you can go down the ETF route buts essentially the easy way out low risk low reward buy the whole market in the hope that there’s an overall uptrend over the years/decades.
It all depends also on what capital you have and how much of it you want low/med/high risk, and if you’re a spring chicken with time on your hands or about to retire.
It’s a tough question to answer as it’s really personal to what you’re trying to achieve.
All good advice from the posts.
I would only add two pieces of advice to them.
Firstly how much time and effort do you want to invest in designing and monitoring your portfolio?
The reason I am asking this is if your goal is to have a portfolio that can be left alone to grow while you devote your time to other things. Then using ETFs with a small amount of individual shares you can look at more closely may be the way to go.
If you are intending to devote more time because you are interested in the whole area of investing, then you can have alot more individual shares to look at.
Secondly the reason for thinking about how many shares to have is based around the old saying of “not putting all your eggs in one basket” In trying to minimise the risk of all shares falling down together if a major event occurs like this pandemic. So your shares may be scattered around different sectors as insurance against it happening. On the assumption that short term while all the shares will drop, certain shares in certain sectors will bounce back faster than others. You can also be overweight in sectors that you have a strong conviction/knowledge off.
great idea, taken on board, thanks