Buying Stock with Leftover Cash

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centennialstate
Posts: 58
Joined: Fri Jul 20, 2018 10:15 pm

Buying Stock with Leftover Cash

Post by centennialstate »

When you have a little cash left over in your account after buying your normal, core funds, do you use that cash to buy any individual stocks with inexpensive shares? For example, if I have around $50 left over in a particular account (that is widely diversified, nearly 100% stock ETF's), I'd consider buying a few shares Ford for around $12 per share, or a couple shares of Wendy's for around $24 per share. Just a fun thing to do for a company that I like, and I think Jack Bogle said you can do anything you want with 5% of your portfolio (although I wouldn't do something reckless like crypto). Does anybody do this to achieve more exposure to stocks in an otherwise fund-based portfolio, and are there any downsides to this from a Boglehead perspective?
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Hyperchicken
Posts: 745
Joined: Mon Mar 02, 2020 5:33 pm

Re: Buying Stock with Leftover Cash

Post by Hyperchicken »

I don't do that. $50 of exposure to any stock does not make any difference whatsoever, and so it is not worth my time and effort.

It's like the 5% play money idea hit by a shrink ray.

If that's your idea of fun, go for it. :beer
Marseille07
Posts: 3350
Joined: Fri Nov 06, 2020 1:41 pm

Re: Buying Stock with Leftover Cash

Post by Marseille07 »

I would just leave the cash. I'm building my position regularly, so any leftover would be consumed on the next purchase anyway.
delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Buying Stock with Leftover Cash

Post by delamer »

If you are talking about a taxable account, it’s a minor hassle to keep track of a bunch of small positions for tax purposes.

I’m trying to reduce the number of holdings in my inherited taxable account, in part for the above reason.

Also, by inexpensive shares, do you mean companies with shares selling below what you think they are worth or companies whose shares are at a low dollar amount? Buying due to the later just seems silly.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
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Svensk Anga
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Re: Buying Stock with Leftover Cash

Post by Svensk Anga »

I like to keep one mutual fund in each account so that I can dump any small amount of cash into it and so clean out the settlement fund.
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RickBoglehead
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Re: Buying Stock with Leftover Cash

Post by RickBoglehead »

I'm not understanding this concept of "leftover cash". When I put money into my brokerage account, I invest it.

And if a fund that I don't want to reinvest in generates a dividend, I buy a fund that I do want to invest in with the other fund's dividend.

I even go so far as to check my account after money has been in the settlement fund, and then invest any interest earned. There is no amount too small, I will even buy $.01 of a fund so that the settlement fund is ZERO.

I haven't bought a stock since 2000? I own 1 today.
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