My Stock Market Investing Strategy
I recently decided to get into the stock market investing game to help boost returns on my portfolio. While I probably missed most of the rebound from 2009 lows, I still think that stock market has plenty of profits left for me. I have been following How To Invest HQ, a site that seems geared to someone like myself: an individual with not a huge amount of money to invest that is looking to pick stocks for investing purposes.
After reading this site, my new investing strategy is to pick 5 stocks and slowly add to these over time using money saved from my paycheck. In order to keep trading fees low, I am saving some money from each paycheck and putting it into my brokerage account. Then, when I have saved a total of $1,000, I buy more of one of the 5 stocks I already own. This way, I only pay a 1% fee (typical $10 trades on a brokerage site). If I bought every time I saved a few hundred dollars from my paycheck, the fee would be quite large and take up too much of my total profit.
I have been trying to balance the current price of stocks with portfolio balance. When I go to add $1000 to a particular position, I look to add to the stock that has gone up the least (or has even gone down) in price since when I purchased it. However, if one stock in particular seems to be doing poorly, I will not put so much money in it that it begins to take up too much of my portfolio. While my ideal balance is to own 20% of each stock, I will allow one stock to go up to 33% of my total portfolio in size if falling and rising prices dictate that that is the way it has to be.
The real strategy though that I learned is to just pick stocks that are good companies. Mutual funds lose out because the holders of the funds invest in both winning and losing companies.