Egg 10 - Chickensteps for New Hens
I find it prudent to only invest no more than 20% of my Total Portfolio at any one time. Usually with 1-4 stocks. It is much easier to manage, I can sell all stocks immediately and quickly, minimizing losses in very volatile markets and most of all Preserve the Portfolio Cash.
If the market suddenly, and without warning dropped 40 points or more, then the worst I would hope to lose is 5-8% of the total portfolio. It is much harder to makeup a 40% loss!
This thought is worth some thought and consideration.
Take small baby steps and try not to run in the barnyard. There are chickens bigger than you who can and will stomp you into the ground to get your money. So, why risk all of your money?
If you are young, there may be enough time left to recoup your losses. On the other hand, if you are near retirement age (or already there as Hawk is), you learn quickly from mistakes made and at some point guard the money well.
Think of profits made as, “After living expenses, how much Extra will I need, or desire, to supplement the Golden Years, or to blow on the grandchildren, or just have Some Fun before I am physically unable to?”
I started stock trading when I was 54. There was still time before I reached retirement age to take care of finances and have a cash buffer set aside. If you happen to be a baby chick in your late 20’s or 30’s, and START RIGHT NOW…. You could have an even better nest egg. Don’t wait, because the one disadvantage to trading is, "Time goes by pretty fast!"