Determination of Size of Investment Capital

Determination of Size of Investment Capital

DETERMINATION OF SIZE OF YOUR INVESTMENT CAPITAL

There are pitfalls and hazards which, as already ex-pained, arise from the predominance of the emotional aspects of the mind's activity, you must plan your investment policy with a well mapped-out scheme, and a prudent course of action.

In determining the amount of capital available for investment, no amount of less than £100 would justify dealings on the Stock Exchange. If this minimum sum is not available, it should be accumulated in savings in, say, a building society savings account, earning some 4% interest, tax already paid by the society.

The object should be to invest £13000 or more to justify the time and effort spent on the serious study of investment with a view to steady and continuous operations as an investor. Otherwise a small sum of one or two hundred pounds invested would merely represent an amateurish isolated skirmish with little or no room for manoeuvre, rather than the planned strategy of a campaign. Obviously, the larger the sum available, the more ambitious the scale of your operations.

Capital amounts In the range of £2,000, £3,000 or £4,000 will enable you more adequately to vary the field of your investments, and so spread the risk. With larger sums of, say, £5,000 to £10,000 available, the range of selection of securities shows a steady rise to a maximum. Beyond £10,000, investment would be largely a matter of increasing the size of the holdings, rather than of the variety of securities held.

In other words, with sums of up to £10,000 the available investment capital shows markedly increasing advantages proportionate to the amount invested. After the £103000 figure is reached, whether your investment capital is £10,000 or £50,000, your proportionate advantages will show little change though, of course, the total figure will.

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