I had lunch with a junior college friend. Apart from being better looking than him and more articulate in English, he is considered more "superior" in most personal traits than I am. Apart from being coming from a better family background than me, he is very humble and not quick to anger. It is the latter two qualities that I feel, I should work on as I often find myself lacking a good head on my shoulders.
Lunch topic revolved around stocks and when I had to be back to the office. He asked me what I thought about Etika and as usual, I was very positive on the stock and told him that there are risks nonetheless.
What prompted this post was that his attitude towards investing is similar to mine. He articulated it while nibbling on some fries, saying that a good proportion of this stocks are high yielding and of good quality - DBS Group and Suntec Reit to name a few.
The balance of his money, he uses to chase a few speculative stocks. He made a handsome profit on Sound Global - he bought in at $0.40 and sold it close to a dollar. However, he also bought China Animal Healthcare after I alerted him of its prospects but has since considered disposing given its stagnant price movement.
But the rich are always different. He puts in at least $10,000 when he longs a stock, a sharp contrast to the paltry $500 that I put in for some counters. His edge is that he can grow his money more meaningfully than me, because the brokerage costs eats up a big proportion of percentage gains, when you buy less than say $5,000.
This brings to the point how much money should you begin with. In my opinion, if you are confident that you will be healthy and employed, with all emergency funding covered, $5,000 per stock is the minimum efficient scale. $56 being the round trip brokerage as well as other costs, this works out to slightly more than 1% hair cut, compared to 10% if you buy only $500 worth of stock.
With diversification of 10 stocks, a good portfolio to start with should be $50,000.
Of course, if you do not have so much money to begin with, you best bet is to try to be like me - go for long shots and hope that you land multi-baggers.