Good Idea #1: Do Half

Okay, this is my first blog post.  My first was just introductory, so I’m going to consider this one my first.  

I’ve been considering how I’m going to organize my posts, and I plan to occasionally and semi-regularly post on the following topics related to my thoughts and experiences in relation to personal finance and investing: (1) Good Ideas; (2) Success Stories; (3) Really Bad Ideas; and (4) Musings and Ramblings.  To be honest, #4 may relate to topics other than investing and personal finance, but I will try to keep those brief…

When I discuss potential ideas related to investing or personal finance to friends, they often talk about considering to buy or sell a stock, paying down this debt or that, etc., and being stuck on a final decision.  As a result, they’ve done nothing.  I often ask, “Why not do half?”  They usually look at me with a bit of confusion.  But “doing half” is often the best way to make a decision and implement action.  If they are considering buying a stock or making an initial investment, buying half of what they were considering starts the action process, and makes subsequent purchases easier if they continue to purchase it.  If they are considering selling a stock, selling half goes ahead and takes half of the gain (or loss), and makes subsequent sales both less material to your overall portfolio, as well as easier to do. Thinking about putting funds with a new investment manager, or a different mutual fund, or putting some funds in a retirement account, but can’t make up your mind?  Do half.

My first stock purchase was in October 1985.  It was a $1,000 stock purchase – 50 shares of a stock valued at $20.  The commission from a major broker, with no advice given, was $38.07.  Think about what $38 bought in 1985; a month’s water bill fairly easily, or 10 movie tickets.  In today’s dollars, that’s now $92.  Do stock trades cost this now?  Absolutely not; for those that self-manage their portfolios, you’re most likely now paying from nothing to about $7/trade.  So, what’s my point?  My point is that it costs almost nothing in incremental fees to split a trading decision into multiple trades.  So, go ahead.  If you’re having a difficult time making a decision on what to do financially?  Well, simple enough.  Do half.