Stock Trading - Entry 27

So I logged in to my account on Wealthsimple (use this link to create your own account and get $25 free dollars) recently one day because I wanted to buy, but not much. Just a little. I doubted it was worth it, but when I checked out the fee page, I found something verrrrrrry nice:

That's right. I can now buy and sell stocks for free, even one or two shares at a time! This made a difference since I only had $100 to invest, hadn't found found much in the way of cheap stocks to invest (more) in, and had been eyeing one particular dividend-paying stock.

Note: I am not dispensing financial advice. I am only writing about my thoughts and the steps I take on my wealth-building journey.

Why buy a stock that pays dividends? This autumn, with more funds at my disposal due to a recent buyout of a stock I had invested in (which I wrote about in entry 25), I have been aiming to incorporate dividend-paying stocks into my portfolio and analyse them over time (against each other, against regular stocks, and against ETFs). The approach I am taking is described in detail in my previous entry.

The stock I picked was Savaria Corporation (SIS). Although I had some initial doubts, they strike me as a very strong company, have fingers in more pies than I originally thought, and don't seem to profit on healthcare in a way that violates any of my sell-out lines (for info on those and how to develop your own, click here). The only issue for me has been the share price, which at the time I purchased them was over $20 per share. Well, now I don't have to wait forever to buy a whole bunch to make the trading fee worth it; I bought a measly six shares with no trading fee. What was even more interesting was, I bought in the morning and by the end of the day, the share price had risen by almost a dollar!

I am holding onto those six shares at the moment. I am still not a penny trader because I don't want to be glued to my screen after I log out of my day job. But still, a few nice surprises.

Does this mean I have spare money? No, this is my retirement fund I am building. Everything I am doing now is about identifying options and developing my investment rules. Questions for which I am seeking answers regarding the management of my stock portfolio are:

1. When the purchase price of a share is less than $2 each, when should I aim to sell those cheap shares according to whatever industry the company is in? (At this point, I doubt the answer is based on share price.)
2. Are there additional considerations to influence a buy-decision for me for shares with a price of over $5 each compared to those over $15 each?
3. What percentage of my portfolio should be in niche ETFs I throw money at versus active trading on my part? (Ask me again in a year when the ones I got mature.)
4. When should I sell a dividend-paying stock?
5. Are there additional factors I need to consider when deciding to buy a dividend-paying stock?

For that last question, I said F it. I bought six shares in Savaria and that investment is small enough that, no matter what lesson I learn (see question 2, above), it will be worth the worst case scenario of a ~$130 write-off. But I don't expect anything anywhere near as bad as that.

Didn't I say this whole journey was to kickstart myself into stock investing with only $360? Yes. Why do a shoddy analysis and buy that stock now? I have been eyeing it for months, so I will respond with the following.

Do I only have $360 in my portfolio now? No, more than that. If I still had less than $1,000 to invest, my appetite for "paying" for lessons (i.e. being open to selling at a loss) would be very low. In other words, my stock trading journey would have simply been much longer before I arrived at this point. Plus, I only have to learn the lesson once to answer question 5 above. My recent SIS purchase comprises a whopping ~3% of my portfolio as at publishing this article and the chance of me selling at a total loss is incredibly low and any dividends can help offset any loss.

Before you read the following paragraph, bear in mind that the stock I will talk about next comprises about 1% of my portfolio (as at publication of this article).

Since it was a Friday and I was in an F it mood, I have decided to write off FE Battery Metals. I technically still own some stocks in that company, but I will completely ignore it in my portfolio analysis from hereonin and consider it a total loss. Could they surprise me in ten years? Sure. Am I gonna hold my breath? No. Will I be surprised if it radically turns around? Oh yeah. In short, I think I am out of mineral mining for the time being as the companies I consider either violate my sell-out lines or turn out to be just like buying a lottery ticket because I am obviously missing something when it comes to investing in that industry. That said, I will re-evaluate FE Battery Metals if the share price goes above the price I bought it for. Otherwise, F it.

(On a side note, I had a few dollars left over so I put in an order for two shares with a price tag of a whopping $5,10. Either of these tiny orders has now puts me in the same category as any other hard worker who scrounged up a few dollars to buy a few shares. I always wondered about how that could work in terms of portfolio building - and now I know!)

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