No Perfect Number

Q Is there a perfect number of shares of a stock to own? — S.W., Elkhart, Indiana

A No. Focus instead on the dollar value you want to have invested in a given company. For example, if you want to buy $3,000 worth of Apple stock, divide that by its recent price of around $264 per share. You’ll arrive at 11.4, so you’d buy 11 or 12 shares. Want $3,000 of Ford Motor Company, which recently traded near $9? That would be about 333 shares.

Don’t let any one stock dominate your portfolio. For example, if your Apple shares grow in value to make up 50% of your holdings, that’s a lot of eggs in one basket. It might be wise to trim that position and redeploy those dollars into another stock you’re confident about. Be sure to diversify, owning stock in a range of companies and industries.

Try not to own too many different stocks, though. If you own, say, 50, you probably won’t be able to keep up with them all, reading earnings reports and annual reports and news stories. Also, if a stock that represents just 2% of your portfolio doubles or triples, its overall effect will be small.

Most people might aim to hold between 10 and 20 stocks. Even those can take a lot of time to manage, though, so consider a low-fee, broad-market index fund, such as one that tracks the S&P 500, for much of your money. Learn more by searching for the terms “index fund” and “Motley Fool” using Google.

***

Q Thumbs up or thumbs down for day trading? — R.H., Fort Raleigh City, North Carolina

A Thumbs down. Way down.