# How to calculate min. investment amount to reach certain buy in

I invested in a stock which is now 70% in minus. So now imagine I believe it will come back. I want to use the low to invest more money but I'm not sure how much. How do I calculate the necessary amount I need to invest, so my personal return rate changes from -70% to e.g. -10% ?

You have invested `X` in a stock which now has a value of `0.3X`. You want to buy more, say `Y`, such that your overall loss is only 10%, which means that `0.3X + Y = 0.9(X+Y)`. To solve for Y:

``````0.3X + Y = 0.9(X+Y)
0.3X + Y = 0.9X + 0.9Y
Y - 0.9Y = 0.9X - 0.3X
0.1Y = 0.6X
Y = 6X
``````

So you would have to invest 6 times what you originally invested (or 18 times what it's worth now) to drop your loss from 70% to 10%.

Note, however, that you haven't actually gained anything. Your overall return has not changed if you include what you plan to invest. It just makes that stock look better, while drastically increasing your exposure to that stock. Trying to increase the "performance" of that stock is partly a "sunk cost" fallacy. You cannot change the fact that your initial investment went down 70%.

Another way to think about it is: if you did not own that stock at all, would you buy some? How is that different from what you're proposing?

• +1000 for that last phrase. Buy/hold what you think is most likely to give you the most gain relative to where it is now,, which may be this stock or something else . If you think something else will go up faster than this stock will recover, it isn't unreasonable to sell at a loss and put the money into that other stock. Or you can put new money into the other stock. Or sell only part of the dropped stock. Up to you to decide what you think the market is likely to do in the future. This is one reason I don't try to play individual stocks and stick with widely diversified mutual funds. Oct 13 at 13:28
• Thanks for your answer. I think that helps some people 👍Yes I know it does not improve the overall gain. This is why I wrote that I believe in the stock. Because a compensation of minus 3-10% could happen much quicker than minus 70%. For this one I basically follow the buy the dip approach ;-) Oct 14 at 18:00
• 18 times what it's worth now? Rather than throw another \$60k at this, a marginally better answer would be some cheap call options if they exist (far less risk). The real error in this was assuming no huge share price gap, riding it down 70%. It should have been defended or cut loose long before that happened. Oct 14 at 18:12