How much should I save up per trade?
I have about 62 shares of Home Depot stock that my grandparents slowly bought for me over the years (thanks grandparents!), and I want to start building up a more diverse portfolio. Specifically, I want to start investing in quality companies that have a long track record of paying dividends.
I have an online brokerage account with TradeKing, and they charge .95 per stock trade. My dad was suggesting that I save up at least 0 before making a trade so that I'd only be losing 1%. I realize that it'd be to sell it as well, but I plan on doing that as infrequently as possible, as I'm looking to be a long-term investor. I considered maybe waiting to save up 00 for a trade, but I'm already putting money into a 401k as well (about 0 every paycheck), so it might take longer than I want.
I know that you guys can only make suggestions, but I was wondering if there were any general rules that people followed. I couldn't really find anything in my own research. Thanks in advance for your advice!
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I'd answer it this way: What do you want to do?
I'd say any amount is acceptable from as low as 0. When you look at the specific "tree" of investing paying for a 0 seems unacceptable. However when observing the "forest" what does it matter if you "waste" on a commission? Your friends (and maybe you) probably waste more than multiple times per day. For them buying a latte might empower them, if buying another share of HD, for a similar cost, empowers you than do it. In the end who will be better off?
Studies show that the more important part of building a significant investment portfolio is actually doing it. Rate of return and the cost of investing pales in comparison to actually doing it. How many of your peers are doing similar things? You are probably in very rare company.
If it makes you happy, it is a wonderful way to spend your money.
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