So you started off with a couple thousands of dollars. A decent amount to get your feet wet and hold 2-3 solid positions in stocks at one time. Suddenly your returns are 3, 4, or even more times that of the market’s average. Hey, your return is even better than those of top mutual funds and other investing assets.

What to do next?

Add more money to your account, right? Why not?

If you made 40% returns with $5000, then imagine what you could do with 20,30, no $60,000. Its a win-win situation, right?

By now you probably already realized I was just baiting you into an obvious corner. Just because you are lethal with $5000, that doesn’t mean you can duplicate that success with more capital. Here’s why:

Lack of Good Plays

When you are limited to only holding a couple stocks at one time, it is easier to single out good and bad plays. For example, with $5000 you can probably have 2-3 stocks at one time. Out of the thousands that are out there, it seems almost impossible not to find 3 good plays.

Once you begin to increase your capital, suddenly you have to find more and more stocks to play at one time, otherwise whats the point of adding more money to your portfolio? If you do not already have a solid system, scan, or whatever it is you do to find stocks, then it can be hard to make good use of all the money and end up in the red.

Often times, that is why many high profiled brokers or funds don’t see high returns so often. With all the money they have to manage, they merely don’t have the man power to physically hand pick each stock. Rather they have scans created that picks stocks that fits their criteria.

Just like in any business. The larger it gets the more it seems like you need to automate or outsource.

The Ability to Maintain High Pain Threshold

By this I mean you need to make sure you don’t get scared at the first sign of loss. In the $5000 example, making $200 may have seemed like a great day and losing $100 was probably no big deal. What happens when you lose that same percentage with $60000 of capital, which equals $1200.

Will you get scared, frustrated, stressed out?

Some do, and that causes them to make bad decisions, which ends up making the situation even that much worse. Do you have what it takes to not get squeamish when you lose so much of your OWN money in one day?

On the flip side, can you maintain not getting too excited when you make $1200 in one day and let your guard down?

Disorganized and Lack of Plan

Along with more money comes the need to have a clear and more focused plan. Like I stated before, with less money you hold less stocks. This means that you could probably remember many of the buy and sell points on the top of your head.

With more money, that may not be the case. That is why its important to have a solid game plan. You should record everything you want to buy, sell, when to do it, and problems that you encountered. The last thing you want to happen is have your stock plunge because your forgot the sell point.

This will save you time when it comes to taxes and actually help with the ability to add even more money to your account.

Final Thoughts

Now I am not saying that you can’t be successful with more money; however, you should plan and be cautious before throwing the boat into the equation. The more money you add into your portfolio, the more you should treat it like a true business. If an actual company had no plan, then they probably wouldn’t grow in the long run, and either will your portfolio.

Like Diddy said, “more money you come across, the more problem we see.”

image source - discoveryconsulting.com

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