Hey guys just wondering how you guys allocate you funds when purchasing more stock in your portfolio. ie do you only strengthen your position when it’s down or do you buy when it’s up. I have funds and want to buy more Apple but it’s up 3-4% today, would you wait till it falls a bit and buy something else that’s down or would you just buy. Be interested to know how you all manage your portfolio.
My plan is to go for cost-averaging so it won’t matter to me if it goes up or down and hold it for years.
I do a mix of a lot of things.
I have always some cash reserved in case my favourites have a sale on (TESLA or APPLE for example). I leave that in a 1.5% interest account.
I have a system where I go step by step. So first if one of my positions are down I buy more to make sure I am having a good average overall.
If after that I still have some cash to invest (I usually have a fixed budged for investing). I put some in the S&P500 or buy those positions that are slightly up (Apple being up +3% that day would be too high. I recently topped up on Disney (my position was up 0.5%) so it hurts less if it drops back down.
If I still have some cash left lets say all my stocks are high up and the S&P500 is high up I usually put my cash back in the ‘reserved cash’ pot. This is the pot that is hoping for a recession or something…
I hope this all makes sense to you guys … I have a nice Excel sheet for that…
Generally I don’t look at the prices , I just buy.
I keep regularly investing, 95% into things like VWRL and VGOV and 5% into other things that take my fancy now and then. I don’t beat the market’s return, but over the long term that’s ok. It works.
I am usually placing things I want to buy on a watchlist and wait to have a good entry point. I don’t know if I am right or wrong, but I like having better starting yields on my positions. Dollar cost averaging is perfectly fine aswell, especially for ETFs.
Roughly what I do:
• Invest monthly into index/etf’s into an ISA.
• Every 3 months put chunks into Gilt & Bond etf.
• Buy individual stock in chunks when low. Like £100 | £250 | £500 a time.
Any spare change always goes into the FTSE 100 etf or US index fund or Global Small Cap.
(On top of putting a little cash aside for investing)
Buy before it goes up, and if it doesn’t go up don’t buy it
Buy low - sell high.
I recommend reading Vanguard’s analysis on this:
Dollar-cost averaging just means taking risk later
Takeaway message: If you are A) investing long-term and B) assuming markets generally trend up, then a lump sum investment (LSI) outperforms dollar-cost averaging (DCA) on average. Historically, LSI outperform DCA in two-thirds of cases.
Just remember Vanguard has competing financial interests with these types of analyses.
You’d guess Vanguard’s maths is right.
However, the statistical averages don’t help you if you’re in the third of cases where LSI doesn’t outperform. Or worse, if you’re in the x% who experience the market fall over shortly after putting that lump sum to work. Ie there’s a psychologically optimal outcome to find as well as the mathematically optimal one. And if you’re a new investor maybe the psychological dimension is more important: get you in to investing in a way that doesn’t make you fearful or bale out if the market goes down.