Dividend Growth Investor - Investments For September 8th
I wanted to let you know that I made a few smaller investments this morning. I usually try to invest in 5 - 15 companies per month, but I have only about $1,000 to deploy. This averages out to about $100 per company. Sometimes, I may split this further, especially when I am running out of funds to deploy for the month. So, instead of allocating $200 in two companies, I would allocate $50 in 4 companies in one month and then allocate $50 in 4 companies in the next month.
These are companies that are frequently in the attractively valued column for me too. If a company that's rarely cheap gets attractively valued, I'd likely invest a little more than $100 in it.
I tend to build positions more slowly, as part of my risk management process. This gives me ample time to correct course and stop adding to a position if I turn out to be wrong. Buying several companies at a time each month also adds to the diversity of the portfolio, and makes it more resilient to shocks. The flip side to this method of accumulating positions slowly and over time is that in the bull market we had before, many quality companies had been available at a discount once or twice for very brief periods of time. This means that I may miss out from such opportunities, because I have already invested all capital or because I didn't move too quickly. Life is full of trade-offs.
That being said, I believe that investing consistently, every single month, beats sitting in cash and waiting for a crash.
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