Investing 102 - Page 150 - Lateral-g Forums

**96z28ss** · #**1491** 05-17-2012, 12:55 PM

Another newbie question about being diversified.

Lets say you have $50k to invest. Are you diversified enough with 3 stocks, 5 or 10?
At what point are you spread out to thin?

If you own stocks that pay a dividend, when they pay out, your dividend is only enough that reinvesting it get you only 1 share, or 4 shares a year.
Are you diversified too much. And holding more shares would compound quicker.

toy71camaro · #**1492** 05-17-2012, 01:08 PM

Quote:

Originally Posted by 96z28ss

Another newbie question about being diversified.

Lets say you have $50k to invest. Are you diversified enough with 3 stocks, 5 or 10?
At what point are you spread out to thin?

If you own stocks that pay a dividend, when they pay out, your dividend is only enough that reinvesting it get you only 1 share, or 4 shares a year.
Are you diversified too much. And holding more shares would compound quicker.

I'll venture out, and offer my opinion on this...

I would say it depends on what stocks you've picked.. if you pick 5 stocks all in the "Tech" sector, your not diversified at all.

If you pick the "best of breeds" in 3, or 5, or 10 different sectors, NOW your diversified.

It was mentioned before, that it wouldnt be wise to invest more than 5% of your total investment money into a single stock. With that guideline, If *I* had 50k to work with, i'd probably choose between 7-10 Dividend Champs across multiple sectors, and feel "comfortable" about being diversified.

As for the "not enough to buy one share a year".. who cares. Its a % game 2.5% divided on 1 share gets you the same 2.5% dividend on 0.1 share, or 1,000 shares. You dont gain any extra for more shares at a time.. Thus id rather spread my 50k across a few sectors as previously mentioned, even if it means i only buy 1 share a year of that stock.

Just my 2c anyhow.

strtcar · #**1493** 05-17-2012, 01:50 PM

I thought this was interesting and fitting since we were talking about the FB IPO.

http://news.yahoo.com/saverin-dumps-...VPPTAAP7XQtDMD

CRCRFT78 · #**1494** 05-17-2012, 02:05 PM

I'm curious if any of you own the same stock in different accounts (IRA, ROTH, INVESTMENT ACCOUNT)? I have what I consider a good selection of stocks in my IRA but would like some of the same stocks in a regular investment account as well. My thinking is that the IRA is on a "set it & forget it" long term mode (I won't really forget it of course), but I would also like a regular investment account so that I can be active. Not in the form of day trading, more in the sense that I can move things around and possibly enjoy the investments sooner if need be.

toy71camaro · #**1495** 05-17-2012, 02:14 PM

Quote:

Originally Posted by CRCRFT78

I'm curious if any of you own the same stock in different accounts (IRA, ROTH, INVESTMENT ACCOUNT)? I have what I consider a good selection of stocks in my IRA but would like some of the same stocks in a regular investment account as well. My thinking is that the IRA is on a "set it & forget it" long term mode (I won't really forget it of course), but I would also like a regular investment account so that I can be active. Not in the form of day trading, more in the sense that I can move things around and possibly enjoy the investments sooner if need be.

I dont personally. As i dont have the funds, nor does my 401k allow individual stocks.

BUT, if they did, then i probably would! If they are "great" stocks, then why not? Your limited in your ROTH contributions, so once you have that maxed out, put up the extra in the Investment Account. Buy the same "Great" stocks, or mix it up a bit. (Like, my roth account wont let me buy MLP stocks, so no KMP for my ROTH). So i could only get in one or the other. But as long as your diversified, i dont see no harm in it.

**GregWeld** · #**1496** 05-17-2012, 02:31 PM

Quote:

Originally Posted by toy71camaro

I'll venture out, and offer my opinion on this...

I would say it depends on what stocks you've picked.. if you pick 5 stocks all in the "Tech" sector, your not diversified at all.

If you pick the "best of breeds" in 3, or 5, or 10 different sectors, NOW your diversified.

It was mentioned before, that it wouldnt be wise to invest more than 5% of your total investment money into a single stock. With that guideline, If *I* had 50k to work with, i'd probably choose between 7-10 Dividend Champs across multiple sectors, and feel "comfortable" about being diversified.

As for the "not enough to buy one share a year".. who cares. Its a % game 2.5% divided on 1 share gets you the same 2.5% dividend on 0.1 share, or 1,000 shares. You dont gain any extra for more shares at a time.. Thus id rather spread my 50k across a few sectors as previously mentioned, even if it means i only buy 1 share a year of that stock.

Just my 2c anyhow.

MAN YOU GUYS ARE LEARNING!! I'M SO PROUD OF YOU!!

YES --- What he said!

**GregWeld** · #**1497** 05-17-2012, 02:33 PM

Quote:

Originally Posted by CRCRFT78

I'm curious if any of you own the same stock in different accounts (IRA, ROTH, INVESTMENT ACCOUNT)? I have what I consider a good selection of stocks in my IRA but would like some of the same stocks in a regular investment account as well. My thinking is that the IRA is on a "set it & forget it" long term mode (I won't really forget it of course), but I would also like a regular investment account so that I can be active. Not in the form of day trading, more in the sense that I can move things around and possibly enjoy the investments sooner if need be.

I would NOT do that.... the key to being diversified has little to do with what account what is in... it has more to do with TOTAL INVESTABLE FUNDS -- and then keeping each investment (per name) to 5% or less....

Don't ever get complacent with a set and forget.... it's more like set - REVIEW - ADJUST - and keep them employees WORKING at all times.

CRCRFT78 · #**1498** 05-17-2012, 03:07 PM

What I meant by set it & forget it is that my choices are for the long term. I don't plan on changing them often by buying and selling. I'm constantly reviewing and checking the status.

The investment account would be more for making some money for "luxury" expenses (play money, car money) not "neccessitiies". However, I would approach it with the same seriousness as the other accounts. I would approach it with the same long term mindset.

**GregWeld** · #**1499** 05-17-2012, 04:57 PM

Good!

Remember that MANY people read these things and may never comment etc... and they may never go back and read 8 ZILLION pages to get to this point...

So what I was doing was to say -- don't set it and forget!

Many people on here have an entire LOST DECADE of set and forget 401K's and they're just now realizing what a huge cost that has come with!

**96z28ss** · #**1500** 05-17-2012, 05:40 PM

Quote:

Originally Posted by GregWeld

Good!

Many people on here have an entire LOST DECADE of set and forget 401K's and they're just now realizing what a huge cost that has come with!

yep! I never looked at it. 1996 til 2012. Thanks to original poster, Greg and all other seasoned investors for opening my eyes. Im still new to this and learning.