How Many Shares per Stock Should I Buy?
There's no universal answer to how many shares you should buy. but a few factors such as capital you have to invest, diversification, and buying fractional shares.
Published May 11, 2021.
A few factors determine how many shares per stock to buy in addition to how much capital you have. Consider diversification and buying fractional shares of stock.
With that in mind, here’s how to determine the ideal number of shares you should buy.
1. Shares you can buy based on price - Looking at how many shares you can buy depends on the price and how much money you have, assuming your broker doesn’t charge.
2. Diversification - Just because you can buy a certain number of shares of a stock doesn’t mean that you should. Suppose you put $1000 into a new brokerage account, and the stock you want to buy trades for $50, which means you can afford 20 shares. But, instead of buying more of one stock, a better investment strategy would be to spread your initial deposit across few companies.
If you're investing in individual stocks, try to have at least 10 to 15 different stocks in your portfolio to diversify your investments.
3. Buy single shares -It’s also possible to buy a single share of a stock if you have a small amount of cash in your brokerage account.
4. Buy less than one share (fractional shares) - Also called dividend reinvestment. Let’s say a stock you own trades at $40 and pays quarterly dividends of $10, then dividend reinvestment allows you to buy 0.25 additional shares.
There's no universal answer to how many shares you should buy, but you can assess your situation and decide upon that.
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