Isn’t it everyone’s dream to buy at an historical low and then see the stock advance? Some dreams come true, but not all….
Sooner or Now?
So the question constantly arises, how much to invest now, what to do if it is not all at once?
I am the type of person that keeps some dry powder. I have until now always avoided investing my maximum available funds in any investment. In recent years, under most circumstances, I have taken to investing some round figure, and then wait to see what happens.
As examples, if a stock is not a high-priced flier, and I have decided it is time, I may purchase a round number, say for example 100 shares, assuming I have the funds available. Or if it is a higher-priced item, I might go for 50 shares or even ten. Happily, with the price of commissions nowadays at zero, any distaste for fees has been eliminated.
If the stock price of a company I am interested in has declined to or below my target price, I may buy additional shares over time, even within a few days or weeks.
As previously mentioned, I monitor the prices of my holdings and have assigned a target price to each security. If and when the price of one or more decline to within striking distance of that target, I start to pay attention. I combine this watchfulness with the calculation of where the stock is in relation to its 52 week range.
What Future?
Depending on when I purchase additional shares, I may or may not see the additional dividends in the next dividend distribution, depending on the stock’s record date. Sometimes I need to wait until the following dividend pay date to the dividend increase. I never time purchases because of a stock’s record date.
My dividend income increases whether I buy additional shares or not. Of course, the more additional shares I buy, the more my dividend income increases.
Should I encounter the event of having a larger lump sum to invest, I do not think I would take the plunge all at once. I would spread out my purchases amount different stock, on different days, weeks or months.
Declines happen. Low prices are real. Rarely do they last forever. Unfortunately, no one knows what will happen in the coming days or years. That is why I won’t “bet the farm” at any one time. I’d rather be safer than take too much risk. I may eschew a larger gain by being cautious, but then I won’t be on the hook for larger losses should things go south. (I am the creator of any “hook” so it is my own self I would be beholden to.)
Do you invest all at once or over time? Let me know here.
The agreement signed under the Button Tree on Wall Street was the foundation of the New York Stock Exchange. The illustration is an artist’s rendition.
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