How much of my savings should I risk on a single stock?
Hello!
I'm pretty new to investing and have been saving up some money that I want to put into the stock market. I've been reading about different companies and found one that I'm really excited about.
The thing is, I'm not sure how much of my savings I should risk on this single stock. I was thinking of putting maybe half of my savings into this company, but friends are telling me that's way too risky.
Thanks in advance for any advice!
1 Answer
I agree with your friends—no matter how much you believe in a single company, putting a large portion of your savings into just one stock is very risky. Even great companies can experience unexpected setbacks.
A better approach is to diversify. You might consider putting no more than 15–20% of your savings into this company and then spreading the rest across other investments. A stop-loss order can also help limit potential losses if things don’t go as planned.
Also, consider looking into index funds. They allow you to invest in a broad range of companies at once, which helps reduce risk and provides a solid foundation for a beginner portfolio.
Investing is a journey—take your time, keep learning, and don’t rush into putting all your eggs in one basket!