Investing 102

[bdahlg68]

Originally Posted by dhutton

I have 12 stocks spread across several sectors in the Schwab account I opened in January. Now I want to invest some additional money. Some have done considerably better than others. A couple are down a few percent and I have a handful that are well above 10%. Should I invest the additional funds in the better performing stocks, or spread it evenly across the board? I also have a few that have done well in my 401k, would it be a good idea to add them to my Schwab account?

Thanks,
Don

Another thing to consider is whether or not you will continue to have these chunks of money to invest and how big the chunks are. If you are going to continue to have these chunks of money to put in, pick one or two of the stocks you currently hold or a new one and put your money to work. With the next chunk pick one or two other stocks and just rotate through. If this is a one time chunk, diversification is really the way to go. Make sure you feel like you've got the best of the best. As long as you have the confidence in that like Greg is preaching you'll weather the bumps in the road much better.

As far as sizes of stock purchases, I like to keep the commission below 1% to get in. So if your commission is $7, buy at least $700 worth of stock. The lower you can keep this percentage, the better. Keep this in mind when thinking about the # of positions you may want to add to. In Greg's world, he is looking at 0.01%!