Guidelines for getting your portfolio underway

Finding the stocks to buy is only a fraction of the equation when it comes to investing. Beyond what to buy, you need to know where, how much and when to set up your portfolio effectively. If that sounds complicated, we'll simplify it for you.


You'll need a brokerage. Recently, major brokerages announced $0 trade commissions, which is a big deal for small investors. For help on picking a brokerage, check out our blog post on the topic (here).

How Much?

Once you've selected a brokerage, you'll need to begin developing a plan based on the capital that you have available. You'll want to consider two key factors:

  1. How much up front capital you have
  2. How much ongoing capital you'll have

Up front capital

This is the amount of money that you have to invest today. In order to get started, you'll need to have some level of upfront capital. You'll want to decide what amount of capital you have on hand and are comfortable with investing in a dedicated small stock portfolio.

Ongoing capital

This is the amount of money that you're comfortable contributing to your portfolio on an ongoing basis. Ongoing capital is only necessary if you don't have enough up front capital to invest in 12 to 18 stocks (adequately diversifying your portfolio). Eventually, your portfolio should become self-financing making further ongoing capital optional.

Finally, based on upfront capital and ongoing capital you can decide how much of each stock to buy. You'll want to be sure to build a portfolio of 12 to 18 stocks with equal share or dollar amounts in each.


Once you've opened a brokerage account and allocated capital, you're ready to start buying stocks. You can start by scanning page four of the monthly newsletter to identify stocks in Category 1 and Category 2 that pique your interest. Stocks in these categories are both profitable and have a Bowser Rating of 8 or higher (thus considered a "Buy"). Depending on your upfront capital, purchase as many of these as you want.

Next depending on your remaining capital and ongoing capital, purchase each new Company of the Month until you have 12 to 18 stocks.

Reinvesting profits

On an ongoing basis, reinvesting your profits (or even continuing to contribute ongoing capital) is a good strategy to continue to grow your portfolio. The most effective way of doing so is sizing up future positions, or taking larger new positions.

For example, if you started by purchasing 12 to 18 stocks at 100 shares each, but now find yourself with a large amount of cash (either through profitable trades or ongoing capital) you can purchase 200 shares of the next 12 to 18 companies.

This is very popular amongst subscribers and ensures that your capital continues to work, growing your profits even more.


A new investor opens a brokerage account with TD Ameritrade (where) and has $1,000 in up front capital and can contribute $100 per month on an ongoing basis (how much). Based on that amount of capital, the investor decides on a position size of 100 shares per stock.

This investor looks over page 4 and finds the following companies to invest in:

  1. ATGN @ $1.18
  2. HCHC @ $2.17
  3. BABB @ $0.82
  4. MMMB @ $0.68
  5. TRXD @ $1.10

The total cost basis for these five stocks (no including commissions on OTC issues) is $595. That leaves about $400 plus $100 per month to round out the additional seven companies in the portfolio.

Once this investor has 12 companies at 100 shares, he or she plans to reinvest profits and ongoing capital to purchase 200 shares of the next 12 companies.