Should I diversify, or increase positions?

Discussion in 'Investing' started by Shinji0Ikari, Dec 28, 2021.

  1. Shinji0Ikari

    Shinji0Ikari New Member

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    First things first, I an very new to investing, though I have had some knowledge for a while, just not the ability. I just opened an account about 6 weeks ago and am trying to put about $260 in every 2 weeks, not a lot of money compared to others.

    I am concentrating on dividend stocks, with the goal of reinvesting the dividends I receive for about the next 21-22 years (I am 44.).

    I know that diversification is part of our safety net, and I like the idea of owning many different companies.

    I am buying stocks in the price range of ~ $4.50 - $20.00 .

    I am working towards being able to get 1 share with each dividend payment on the stocks I am buying. Obviously the higher the number of companies or funds I invest in the longer it will take to reach the 1 share/dividend short term goal.

    Once I reach the 1 share/div goal, should I find another stock and do the same, or just increase my position in the stocks I already have an interest in?

    For fuller disclosure, I also have an account through work that I recently rebalanced and am still adding to with each check, so in reality I am investing closer to $ 560 per check between the 2 accts.
     
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  2. gtrudeau88

    gtrudeau88 Well-Known Member

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    Here's a few ideas regarding diversification

    - owing shares of an index fund like VOO automatically diversifies you as VOO is invested in all the stocks that make up the S&P 500. There are plenty of index funds out there.
    - You should not invest in any single stock without knowing about the company, what they produce, fundamental health, etc. The more different stocks to own, the more you need to research and keep track of.
    - If you have more than 10 to 15 positions you dilute your gains while only buying a little more protection. Over-diversification kill returns.
     
    #2 gtrudeau88, Dec 28, 2021
    Last edited: Dec 28, 2021
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  3. WXYZ

    WXYZ Well-Known Member

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    If it was....."ME"......yes it is all about me....."I" would simply put the entire amount into the SP500 Index until I had at least $50,000 to $100,000. "I" would not do individual stocks.

    An alternative plan......again for me......if I wanted to do some individual stocks as you do.....I would put every other investment of $260 into the SP500 and every other $260 into your individual dividend stocks. This would give me some balance between being in a BIG INDEX and my own stock picking skills.

    ACTUALLY....the amount you are investing each check.....$560.....WILL result in a very SIGNIFICANT account balance over the long term........If.......you stick with investing this amount from each check in the two accounts. DISCIPLINE is the key.

    WELCOME to the board.
     
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  4. Sundance

    Sundance Member

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    VOO is a great index fund. Vanguard is hard to beat.
    CEFs are a good source for high yield dividend stocks, some pay monthly. Blackrock has some nice ones.

    "I" would put the majority in a index fund and keep it simple. I own 4 companies, VOO is one of them.
    Discipline is your best friend.
     
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