How do I figure out portfolio allocation percentages?

An allocation percentage is the percentage of your investment portfolio that goes toward a specific company. (i.e. If you have $100,000 total to invest, and you’re initiating a 1.3% allocation towards “Company A”, then you are investing $1,300 in “Company A’s” stock.

Here is a formula to follow:

Allocation Percentage x Total Investment = Investment allocation

.013, or 1.3% x $100,000 = $1,300

Some of our premium portfolio services recommend buying all of the stocks within the service in equal amounts - which means each recommendation is equal-weighted. 

Let's say we have a portfolio that will have 40 recommendations over the course of a year. This would mean each recommendation has a 2.5% allocation.

In this example, while there will be 40 total recommendations, that doesn't necessarily mean 40 unique stocks. Some of our picks will include re-recommendations. If a stock is recommended twice, that means we're investing 5% of our initial capital into that company (and the rare triple recommendation is 7.5%).

Please note that we, here at The Motley Fool, are not financial advisors, and do not provide any personalized advice. The decision of which stocks to purchase, how many shares, etc, is entirely up to you.

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