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Q & A

What kind of initial investment do we need to get started following one of your recommended lists?



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Q: What kind of initial investment do we need to get started following one of your recommended lists? I’m an aggressive investor willing to accept risk in exchange for increased return potential. Which portfolio makes the most sense for me?

A: Dear Subscriber,

We don't have a specific minimum investment in mind, because what works best depends on how much money you plan to invest and how much you must pay to invest it.

To follow one of our lists, you’ll pay some commissions up front to purchase a portfolio. However, we don't make changes to that portfolio every week, so the ongoing costs won't be as high as the start-up costs.

Naturally, the cheaper your trading costs, the smaller the effect of commissions on your returns. If you pay, say, $10 per trade and purchase stocks in $2,000 positions, the commission cost is 0.5% per transaction. Not great, but reasonable. At the moment, our Buy List contains 28 stocks. Using our example of the $10 commission, a $50,000 portfolio would generate a 0.56% commission, while the cost would equate to 0.28% of a $100,000 portfolio.

As for risk, the Buy List has historically been more volatile than the Long-Term Buy List, which includes some larger, slower-moving stocks. The Buy List and Focus List tend to appeal to investors with a higher risk tolerance.

Thanks for your interest,

Bob Sweet, CFA
Managing Editor, Dow Theory Forecasts

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