Hi,
I’m already diversified to +30 stocks and wondering how to keep investing surplus income monthly to these stocks? Buying one stock of each at a time creates too much transaction costs. Putting monthly savings to 2-3 stocks creates an ”imbalance” and puts too much weight on those.
Your thoughts on this and approach?
If you have small amounts then why are you invested in 30 stocks? Separately, many brokerages allow you to trade fractional shares. Alternatively, brokerages like Fidelity allows you to create your own bucket and buy them, that way the $ equally gets spread across all the stocks. Of course they charge something like $5 per month or so… don’t remember. check it out.
Dollar cost averaging is a common way to deal with this. If you invest a fixed amount at regular intervals, your average cost tends to be reduced because you buy more shares at lower prices.
This works best with mutual funds or etfs. With 30 stocks, pick your interval and buy shares in order. If investing monthly buy 2.5 stocks per month or two one month and three the next. You will average out in time. I wouldn’t worry about short term imbalance. Plan to be in balance at the end of the year.
Thanks, think I was too focused on ”details schmetails”. That imbalance shouldn’t be an issue on the long run. With buying 3-4 company’s stocks each month will end up balancing itself out in 8-10 months, which is a relatively short timeframe.
There is no reason for anyone to pay transaction costs these days. There are dozens of brokerages that allow you to trade for free.
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Not in every part of the world. The trading costs are small, but everything adds up.