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Owning 10 stocks doesn't mean each stock represents 10 percent of your portfolio. Don't use the number of stocks owned to figure what percentage of your money is in each one. Instead, you use the dollar value of your stocks. This gives you an accurate picture of how much of your investment portfolio is at risk in any one stock. This helps you make investment decisions, such as when to purchase or sell shares of a particular stock.
Step 1
Calculate the value of your entire portfolio. Add up the amounts you have in cash, bonds, stocks, real estate, mutual funds, certificates of deposit, money market accounts and exchange-traded funds. Although these investments may change in value daily, you must take a financial snapshot of where you are on any given day. If you have an investment account in which all these securities are held, it may provide you with a grand total. Otherwise, you will have to contact the various brokers and bankers you use to get your dollar figures. Write down one total that includes everything.
Step 2
Figure the dollar value of each stock investment by multiplying the number of shares by the share price on any specific day. For example, if you own 200 shares of a stock that's worth $25, your total investment in that stock is 200 times $25, which equals $5,000. Do this for each stock you own. Try to calculate all your stocks in the same day, because the next day stock prices will change and that will change the value of the investments.
Step 3
Determine the percentages of the portfolio each stock represents. Divide the dollar amount you have in one stock by your total portfolio amount. For example, if you have $5,000 in a stock and your total portfolio is worth $110,000, divide 5,000 by 110,000. This gives you a figure of 0.045. Multiply 0.045 by 100 to get your percentage. Continuing the example, 100 times 0.045 equals 4.5. You have 4.5 percent of your investment in this stock. Repeat this process for each stock you own.
References
Warnings
- The values of investments may change daily. Calculate your percentages periodically to see if you are comfortable with the percentage you have in each stock. For example, if a stock goes up in value to the point that it represents 25 percent of your portfolio, you must decide if you are comfortable having that amount of your portfolio invested in a single stock.
Writer Bio
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.
