02-24-2020, 11:09 PM
And regarding the buying 1 or 2 shares discussion, well I do see SGs point. It's not about the number, it's about getting left with a tiny position in a stock after it appreciates to a valuation that prevents you from adding more. And for those who don't follow their stocks closely, that is ok. But I personally stay quite active in following my holdings, so I have the seeking alpha news on, I eye through every quarterly report and the earnings call transcript. If I have $200 worth of a stock with 2% yield, that gives me $4 per year, minus tax, for this effort.
This has happened to me a couple of times. Two options really: 1. the stock is still decently valued for the long term in which case I can always buy more once in a while and with time the position will build up. 2. The stock is overvalued so I don't want to add to it anymore, then I just sell and reinvest that money into something different.
So I do prefer to start my positions with a bigger buy. Just to get that position up and running. In general I divide my monthly deposit into 3 parts and buy 3 different companies. These are what I consider to be that small nibbling. Dividend reinvestment generally gives me a 4th nibble per month. But when I start a new position I might do it with a value of 2-4 times the usual nibble. And then keep nibbling on as I see fit.
This has happened to me a couple of times. Two options really: 1. the stock is still decently valued for the long term in which case I can always buy more once in a while and with time the position will build up. 2. The stock is overvalued so I don't want to add to it anymore, then I just sell and reinvest that money into something different.
So I do prefer to start my positions with a bigger buy. Just to get that position up and running. In general I divide my monthly deposit into 3 parts and buy 3 different companies. These are what I consider to be that small nibbling. Dividend reinvestment generally gives me a 4th nibble per month. But when I start a new position I might do it with a value of 2-4 times the usual nibble. And then keep nibbling on as I see fit.