Quote Originally Posted by boring View Post
I was lucky enough in my early investing career to read a motivational book that gave the advice to "start with the end in mind". So I spent a good amount of time imagining what my "end game" portfolio would look like. I knew I wanted financial freedom, and I knew I wanted to build a stock portfolio of great businesses that would pay me enough dividend income that would exceed the salary of the professional middle-management job that I aspired to have at the time.

And I wanted all this before I was 30. It ended up taking me an extra 15 years before I reached my goal, but better late than never.

Today, when I open up a new stock position in a company, my intention would be for a position no less than $30K (USD or AUD), but preferably $50K. However, I will scale in to a position if I'm not 100% confident that the stock won't fall in price. I'd look to scale in at increments of $10K over a period of 6 months. It's similar to dollar-cost averaging.

You have to realise that's what I do today, and I hold about 30 stock positions which is at very the upper limit of what I can monitor and keep track of.

When I first started, I was living in Europe and I was able to set up a brokerage account in the US of A. that was back in the day when I had to physically ring a broker (I had a Bank of America account) to order shares. I could only keep track of the share price by looking at the Wall Street Journal every morning. I started with USD $5,000 and I opened 2 positions of around $2,500 each in Bristol Myers (BMY) and Worldcom (WCOM). Brokerage was sometime like USD $70 a purchase back then, so I effectively paid 2.8% brokerage on each position.

Yes, you heard it. I owned stock in the infamous Worldcom (I'm wondering whether you are too young to know about this fiasco of a company). At the time I thought, I only have $5,000 and surely I can't go wrong owning a blue-chip Pharmaceutical and Telecom company. I have my first ever monthly brokerage statement (that includes my position in Worldcom) framed and hanging on my home study wall.

I didn't care that brokerage was expensive for the small amount of money I had to invest, it was more important to get some "skin in the game". Learn how it feels to have a fractional ownership in a business, and learn how it feels to experience stock price gyrations and volatility. It was the best decision I made in my life. I was hooked.

I you feel that you would like to own your own portfolio of stocks, get some skin in the game early on. So I think it's absolutely worth spending even less than $5K to buy 1 or 2 positions in some companies you feel that you would like to own directly. Learn how it feels when you have paper losses and learn how it feels when one of your picks becomes a 10 bagger. Don't fret that you are paying a higher percentage of brokerage when you open small positions, what is more important is the fact that you have positions. In 10 or 20 years time, you won't even think about the brokerage that you paid.

I only used managed funds to get exposure to asset classes or regions that I'm not interested in learning or tracking myself. The other reason I owned managed funds was to get commentary from a fund manager who I thought was super-intelligent and I could learn from. Kerr Neilson's Platinum Asset Management was a listed fund that I took an AUD $5,000 position just to get his commentaries. Not only did that position outperform my own portfolio over a period of about 10 years, I learnt a lot about investing to boot.
Thanks again for your input. I suppose I dollar cost average at the moment by contributing money to my managed funds each week, but at such small amounts it doesn't do much difference. I was thinking of creating a fictional portfolio on NZX and tracking that rather than putting in 5k or so in a few shares. I am the type of person that likes to fully know what I am doing before starting something. Then again you do learn a lot from practical application but i feel I should read a few books first before investing any of my own real money. Ideally I would like to have 8 or so stocks with at least 10k each invested. I feel that that is enough diversification but will also provide great returns.