Is there a limit to how many stocks and/or bonds an interested investor can buy?

By Richard Loth AAA
A:

Assuming the question primarily relates to the issuers of stocks and bonds, the simple answer is no. There are no regulatory limitations for investors regarding the dollar amount, number of securities, or the number of issuers for stocks and bonds. However, there are obviously practical limitations of effective investment management for the individual investor as opposed to professional and institutional investors. The latter can easily undertake financial assets under management in the billions of dollars from hundreds, if not thousands, of issuers.

Most likely, a non-professional individual investor should limit his/her direct stock investing to around 15 companies, which can provide for a manageable, diversified equity portfolio. Mutual funds, with their professional management and inherent diversification, offer a convenient alternative to direct investing and are are particularly appropriate for individual investors investing in bonds.

The only limitations an investor would have for buying a particular security would be the size of his/her bank account, as well as the number of shares that are issued and outstanding. In the case of a company's stock, the Securities and Exchange Commission requires an investor to file Form 3 (initial statement) and Form 5 (annual statement) if he/she owns more than 10% of any class of equities. These filings are for information purposes and do not subject a stock purchase or holding to any limitations.

To find out more, see our Investing 101, Stock Basics and Mutual Fund Basics tutorials.

RELATED FAQS

  1. How can you use a debt service coverage ratio (DSCR) to evaluate municipal bonds?

    Learn how the debt service coverage ratio (DSCR) can be used by investors to analyze the risk level of revenue bonds offered ...
  2. How is convertible bond valuation different than traditional bond valuation?

    Read about bond valuation, particularly the differences between how a traditional bond is valued and how a convertible bond ...
  3. What is the relationship between the hurdle rate (MARR) and the Internal Rate of ...

    Find out how companies and managers use hurdle rate, or MARR, and internal rate of return, or IRR, to evaluate projects and ...
  4. What is the rationale behind the effective interest rate?

    Read about the reasons why market actors identify the effective interest rate as it pertains to investing, lending and accounting.
RELATED TERMS
  1. Accelerated Return Note (ARN)

    A short- to medium-term debt instrument that offers a potentially ...
  2. Next Generation Fixed Income (NGFI) Manager

    A Next Generation Fixed Income (NGFI) manager is a fixed income ...
  3. Next Generation Fixed Income (NGFI)

    Next generation fixed income is an innovative approach to investing ...
  4. Class 3-6 Bonds

    Several classes of noninvestment grade bonds held by an insurance ...
  5. Impact investing

  6. Promotional CD rate (Bonus CD rate)

    A limited-time offer of a higher rate of return on a certificate ...

You May Also Like

Related Articles
  1. Stock Analysis

    Is it Time to Buy Floating Rate Bonds?

  2. Professionals

    Beware: These Bond Funds Act Like Stocks

  3. Mutual Funds & ETFs

    Pros & Cons Of Bond Funds Vs. Bond ETFs

  4. Mutual Funds & ETFs

    Pros and Cons: Preferred Stock ETFs ...

  5. Bonds & Fixed Income

    African Sovereign Debt: Risks and Rewards

Trading Center