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. What is the difference between the yield of stock and the yield of a bond?

    Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ...
  2. How do I calculate yield to maturity of a zero coupon bond?

    Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than ...
  3. What is the debt ratio for an FHA loan?

    Borrowing through the Federal Housing Administration requires individuals to provide proof of income as well as information ...
  4. How do I calculate yield to maturity in Excel?

    Learn how to calculate a bond's yield to maturity in Microsoft Excel, which is one of the best methods of comparing bonds ...
RELATED TERMS
  1. Class 3-6 Bonds

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

  3. Promotional CD rate (Bonus CD rate)

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

    An entity that purchases Treasury securities at auction for a ...
  5. Indirect Bidder

    An entity that purchases Treasury securities at auction through ...
  6. Bid Wanted

    An announcement by an investor who holds a security that he or ...

You May Also Like

Related Articles
  1. Investing

    Will 2015 Finally Be The Year For Rising ...

  2. Stock Analysis

    Government Bond ETFs: Pros and Cons

  3. Economics

    Evaluate Your Investment Portfolio For ...

  4. Investing Basics

    CDs or Bonds: Which Investment is Better ...

  5. Investing

    Reflecing On Financial And Investing ...

Trading Center