What Is Good Bankroll Management?

Discussion in 'Stock Market Education' started by Colebra, Mar 5, 2015.

  1. Colebra

    Colebra Well-Known Member

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    Are there any good rules of thumb you can share?
    A friend of mine does like sports bet trading, and he only invests back a certain % of profit made...
    What are good habits, as far as good bankroll management goes?

    Thank you! :D
     
  2. crimsonghost747

    crimsonghost747 Senior Investor

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    Different rules for different kind of investors / traders.
    If you are a long term investor then I would recommend to buy steadily (dollar cost averaging) while keeping a bit of cash (or possibility to take debt if that is your thing) to profit from the dips. And always reinvest all dividends and profits back into the market until your portfolio has reached it's goal... it's called compound interest and it works great!
     
  3. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Agree with crimson.

    I have a "5% rule" - I rarely have more than 5% of my money in any one stock, and most positions are smaller. But if you're just starting out and don't have much capital yet, you may have to adjust that rule for practical reasons.

    More speculative positions that I may not necessarily hold very long will be perhaps 1-2% at most, or perhaps even a fraction of a percent of my portfolio.

    Remember that every time you flip a stock, you're probably being charged a transaction fee by your broker. And if you're in a taxable account, you'll likely have to pay some sort of tax on any gains you realize. We have "long term" and "short term" "capital gains" taxes here in the US, depending upon whether we hold the position in a taxable account for more or less than a full year from the time of purchase.
     
  4. Colebra

    Colebra Well-Known Member

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    Buying the same dollar amount of shares on a fixed schedule. Just different amount of shares, right?

    This, I failed at Investiopedia check :p

    Sounds like sound math!

    I'll have to check on Portugal's taxes.

    Thank you gentleman! :cool:
     

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