Many investors get excited when a company issues a stock split.

What is a stock split? Is it good or bad? How does it affect your investment? A stock split is when a company changes the number of shares outstanding. At the same time they adjust the price of the shares to offset the change. A common split is 2: They can also reverse split, in a 1: If you owned 50 shares, you will now own shares.

As long as you buy the stock before the date the split takes place, your stock will split too.

The record date does not have an impact on your split. Carnival of Personal Finance. Great and informative article on stock splits. This offers some great information that is especially helpful to beginners. I heard that Warren B. If that is the case, no wonder why he never splits them. Your email address will not be published. Sign up to our newsletter!

Posted by Madison on April 9, What kind of stock splits are there? What does it do to the value of your investment? How does a split affect the cost basis? Why do companies issue splits if you still have the same amount of money? Psychology of lower price.

Should I buy a stock before or after a split?

While it is unrelated to the performance of a stock, people look at a lower price of a stock as favorable. Investors may believe that after a stock splits, it will return to the pre-split price.

Psychology of more shares.

Are Stock Splits Good for Investors?

This can create buzz. In addition, if the pre-split price was an all-time high, there was likely a lot of positive vibes already out that the company was doing well. Lower prices often result in more activity.

Companies like the increased liquidity because more people are able to buy and sell the stock. What if you buy a stock after the record date for the split? Is it a good idea to buy stock before it splits all companies issue splits? Comments to Stock Splits Great and informative article on stock splits.

Can you imagine if you had bought a few Berkshire shares back then? Click here to cancel reply. Leave a Reply Cancel reply Your email address will not be published. New Health Insurance Premium Tax Credit?

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