INVESTING STRATEGY
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Is it better to own less shares with a higher dollar amount or lots more shares with a smaller dollar amount ?
Heather Foster
11 August 2022
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Hi Heather. The short answer is, it doesn’t matter.
Price per share seems like it matters when comparing options but it’s largely irrelevant. Here’s why…
Fund A’s shares are worth $100 each. It pays a yearly dividend of $4 – a 4% yield. Fund B’s shares are worth $1 each. It pays a yearly dividend of 4 cents – a yield of 4%.
One is not more ‘expensive’ or ‘cheaper’ than the other. In this hypothetical example, the dividends received are the same on both options: 4%. The same calculation for growth.
Don’t worry about comparing the price per share, one is just cut up into smaller slices that’s all. Just because you can buy 100 times more shares, you won’t get 100 times the return! Think about that for a minute – your returns are based on the number of dollars you’re investing and how that investment performs (which has no relation to how much each share costs).
I hope that helps.
Dave
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