When constructing an investment portfolio, you obviously want to purchase quality investments at the right price. But another factor that isn’t often discussed is the quantity of that stock, bond or mutual fund. You can construct a very conservative or very aggressive portfolio just be varying the quantity.
Let’s say you have $100,000 to invest. If you put $50,000 of it in a foreign growth mutual fund, $20,000 in biotech fund, $20,000 in a utility fund and $10,000 in government bond fund, that’s pretty aggressive. But if you put $50,000 in the government bond fund, $40,000 in a utility fund and $5,000 each in foreign growth and biotech, that’s quite conservative. No change in investments, just in quantity.
When you’re looking at a new investment you have to decide first if you like it and where it fits in your portfolio. Then acquire the appropriate number of shares to match your plan. Do you want 30% of your holdings in this new fund? 3% in this new stock? Look at the percentage versus how aggressive or conservative you want to be.
Planning the quantity as well as the quality of your investments will help you avoid surprises and sleep better at night.