How many shares of an ETF should I buy

Contrary to a lot of advice you’ll see online, there’s no universal “right” number of ETF shares to buy. The count should fall out of your position size (dollars or percentage of portfolio), which depends on your capital, goals, risk tolerance, and time horizon.

Some people also claim the “sweet spot” is 5–10 ETFs, but that’s about how many different ETFs to hold, not how many shares. Focus on allocation first; the number of shares is just the math that follows (fractional shares help if prices are high).

But here's the good news that changes everything: thanks to fractional share trading at major brokerages like TradeStation, eToro, Fidelity, Vanguard, and Charles Schwab, you can start investing with as little as $1. Share price no longer dictates how much you need to invest.

This means the real question today isn't 'how many shares of an ETF should I buy' but rather 'how much money should I allocate to ETFs based on my overall investment strategy.'

The fundamental shift you need to make: focus on dollar amounts to invest, not counting shares. Fractional share trading has completely changed the game. You can buy 0.286 shares of a $350 ETF with just $100, or 1.43 shares of a $70 ETF with the same amount. The share price becomes irrelevant to your ability to invest.

So where do you start? A practical framework is the 50/30/20 budgeting rule:

• Allocate 50% of your after-tax income to essentials (housing, food, utilities, transportation)
• 30% to discretionary spending (entertainment, dining out, hobbies)
• 20% to savings and investments.

Let's walk through a concrete example. Say you earn $50,000 after taxes. Following the 50/30/20 rule, you'd invest $10,000 annually, which breaks down to about $833 per month. That's your investment budget, the starting point for everything else.

Now, within that 20% savings allocation, your risk tolerance determines how you split between stocks and bonds:

• Conservative investors might put 10-15% of their income into stock ETFs and keep the rest in bonds or cash.
• Moderate investors might do 15-20% in stocks.
• Aggressive investors with long time horizons might allocate 25-30% or more to stock ETFs.

Here's the key: determining how many shares of one ETF should I buy starts with knowing your total investable capital. That includes both lump sum amounts (maybe you have $5,000 saved up) and ongoing contributions (that $833 monthly from our example). Once you know these numbers, you can move to the next step.

One more piece of good news: most brokerages now offer commission-free ETF trading. That means that you will be charged $0 for ETF trades. This means transaction costs won't eat into your small regular investments. You can invest $50 every week without worrying about fees making it unprofitable.

Before you calculate how many ETF shares to purchase, you need to establish your target asset allocation. This is the percentage split between stocks and bonds in your portfolio, and it's based on three factors: your age and time horizon, your risk tolerance, and your financial goals.

Asset allocation is the primary driver of your portfolio's returns over time. Research shows it matters more than which specific ETFs you pick. Get this right, and the rest becomes easier.

Here are three model portfolios with clear guidance on who they suit:

Conservative Portfolio (20% stocks, 80% bonds)

This is appropriate if you're nearing retirement or have a 3-5 year time horizon. You prioritize capital preservation over growth.

You can't afford to lose 20-30% of your portfolio in a market downturn because you'll need the money soon. The 80% bond allocation provides stability and income, while the 20% stock allocation offers some growth potential.

Balanced Portfolio (30-60% stocks, 70-40% bonds)

This suits mid-career investors with 10-15 year horizons. You want moderate growth but also some stability to help you sleep at night during market volatility.

The 60/40 split has been a classic allocation for decades because it balances growth potential with downside protection. When stocks drop 20%, your portfolio might only drop 12-15% thanks to the bond cushion.

Growth Portfolio (70-95% stocks, 30-5% bonds/cash)

This is designed for young investors with 15+ year horizons who can weather significant market volatility for higher long-term returns.

If you're 25 and investing for retirement at 65, you have 40 years for your portfolio to recover from downturns. For an even more aggresive approach, you can even reduce the stock allocation by 5-10% and redistribute it to crypto ETFs. The small bond allocation is mainly for rebalancing opportunities, letting you buy stocks when they're down.

Now that you know your allocation, let's address portfolio construction. For most individual investors, holding 5-10 ETFs provides optimal diversification without unnecessary complexity. More than that and you're just creating work for yourself with minimal additional benefit.

Here's the spectrum of approaches:

• Simple 2-ETF Portfolio: One total world stock ETF (like VT, which holds stocks from 60+ countries) and one total bond market ETF (like BND or AGG). This is ideal for hands-off investors who want broad exposure with minimal maintenance. You could literally set this up in 15 minutes and not touch it for years except to add money. It's beautifully simple and perfectly effective.
• Intermediate 6-ETF Portfolio: This typically includes 3-4 stock ETFs covering different areas: U.S. large-cap (VTI or SPY), U.S. small-cap (VB or IWM), international developed markets (VEA or IEFA), and emerging markets (VWO or IEMG). Then add 2-3 bond ETFs spanning investment-grade corporates (LQD), Treasuries (GOVT), and Treasury Inflation-Protected Securities or TIPS (VTIP). This gives you more control over your geographic and market-cap exposure.
• Fine-tuned 10-15 ETF Portfolio: This adds sector tilts (technology, healthcare, energy), real estate through REITs (VNQ), commodities (DBC), or factor exposures like value (VTV), momentum, or quality. This is for investors who want maximum customization and don't mind the extra complexity of tracking and rebalancing more positions.

Here's a critical warning: avoid over-diversification. Holding 30+ ETFs provides no additional benefit and makes portfolio management unwieldy. You'll spend hours rebalancing and tracking performance when you could be doing literally anything else.

Also watch out for fund overlap. Buying five different S&P 500 ETFs doesn't increase diversification, it's just redundant. They all hold the same 500 stocks. Similarly, if you own VTI (total U.S. market) and SPY (S&P 500), there's massive overlap since the S&P 500 represents about 80% of U.S. market capitalization.

Here's something that surprises many investors: broad-market ETFs like VTI (holding 3,500+ U.S. stocks) or AGG (holding 10,000+ bonds) are already highly diversified. You can allocate 20%, 30%, even 50% of your portfolio to a single broad-market fund without excessive concentration risk.

This is fundamentally different from individual stock investing, where putting 50% of your money in one company would be reckless. With ETFs, the diversification is built in.

So when you're thinking about how many ETF shares should I buy, remember that fewer, broader funds often beat a complicated collection of narrow, overlapping funds. Start simple, and only add complexity if you have a specific reason and the time to manage it properly.

Now we get into the specifics of position sizing, which means determining what percentage of your portfolio each ETF should represent. This is where you'll figure out the actual dollar amounts to invest in each fund.

But before, a key distinction - broad-market vs. narrow sector ETFs:

• For broad-market ETFs like VTI (total U.S. stock market), VXUS (total international stocks), or AGG (total U.S. bond market), larger allocations are fine. These funds spread your money across thousands of holdings, so you're already diversified within the fund itself.
• For narrow sector ETFs focused on technology (XLK), healthcare (XLV), energy (XLE), or thematic plays like clean energy or cybersecurity, you should limit positions to 5-10% to manage concentration risk. These funds can be much more volatile because they're tied to the fortunes of a single industry.

Let's walk through a detailed example that shows how this works in practice:

Investor Profile: $50,000 available to invest, following a moderate 60/40 allocation (60% stocks, 40% bonds), decides on 6 ETFs total for good diversification without excessive complexity.

Stock Allocation ($30,000):

• 40% U.S. large-cap (VTI) = $12,000
• 30% international developed (VEA) = $9,000
• 20% U.S. small-cap (VB) = $6,000
• 10% emerging markets (VWO) = $3,000

Bond Allocation ($20,000):

• 70% investment-grade (AGG) = $14,000
• 30% TIPS (VTIP) = $6,000

Now let's convert these dollar amounts to shares:

• Say VTI is trading at $250 per share. The calculation is simple: $12,000 ÷ $250 = 48 shares.
• VEA at $50 per share means $9,000 ÷ $50 = 180 shares.
• VB at $225 per share means $6,000 ÷ $225 = 26.67 shares (fractional shares make this possible).
• VWO at $42 per share means $3,000 ÷ $42 = 71.43 shares.

For bonds:

• AGG at $100 per share means $14,000 ÷ $100 = 140 shares.
• VTIP at $50 per share means $6,000 ÷ $50 = 120 shares.

With fractional shares available at most brokerages, you can invest exact dollar amounts without worrying about share prices. Just place an order for $12,000 of VTI and the system automatically calculates the shares, including fractions.

Let's walk through three detailed, real-world examples that show the complete calculation process from available capital to exact share purchases. These examples cover different investor situations so you can find one that matches your circumstances.

Example 1: New Investor Starting Small

Profile: Available capital $500, goal is long-term retirement savings (30+ years away), aggressive 90/10 allocation (90% stocks, 10% bonds) because of long time horizon.

Stock Allocation: $450 going to VTI (Vanguard Total Stock Market ETF, expense ratio 0.03%). VTI current price is approximately $250 per share.

Calculation: $450 ÷ $250 = 1.8 shares of VTI

Bond Allocation: $50 going to BND (Vanguard Total Bond Market ETF, expense ratio 0.03%). BND current price is approximately $75 per share.

Calculation: $50 ÷ $75 = 0.67 shares of BND

Total Portfolio: 1.8 shares VTI + 0.67 shares BND

Annual Cost in Fees: ($450 × 0.03%) + ($50 × 0.03%) = $0.14 + $0.02 = $0.16 per year. Your fees are literally 16 cents annually as per expense ratio. This is why low-cost index ETFs are so powerful for small investors.

Example 2: Mid-Career Investor

Profile: $25,000 lump sum available now, plus $500 per month ongoing contributions, moderate 70/30 allocation (70% stocks, 30% bonds), 15-year time horizon until retirement.

Lump Sum Stock Allocation ($17,500):

• 60% U.S. stocks ($10,500) split 70% VTI and 30% VTV (value tilt)
  • VTI: $7,350 ÷ $250/share = 29.4 shares
  • VTV: $3,150 ÷ $150/share = 21 shares
• 40% international ($7,000) in VXUS
  • VXUS: $7,000 ÷ $65/share = 107.7 shares

Lump Sum Bond Allocation ($7,500):

• AGG: $7,500 ÷ $100/share = 75 shares

Monthly Contributions ($500):

• Stocks ($350): Split same ratios as lump sum

• VTI: $245 (70% of $350) = 0.98 shares monthly
• VTV: $105 (30% of $350) = 0.70 shares monthly

• International: $140 (40% of $350) in VXUS = 2.15 shares monthly
• Bonds ($150): AGG = 1.5 shares monthly

After 12 months of contributions, you'd have added approximately 11.76 shares of VTI, 8.4 shares of VTV, 25.8 shares of VXUS, and 18 shares of AGG from your monthly investments alone, plus whatever the lump sum has grown to.

Example 3: Pre-Retirement Conservative Investor

Profile:$200,000 available to invest, 3-year horizon (retiring soon), conservative 20/80 allocation (20% stocks, 80% bonds) to preserve capital.

Stock Allocation ($40,000) across 3 ETFs:

• U.S. large-cap 50% = $20,000 in VTI (VTI at $250/share = 80 shares)
• U.S. small-cap 20% = $8,000 in VB (VB at $225/share = 35.6 shares)
• International 30% = $24,000 in VXUS (VXUS at $65/share = 184.6 shares)

Bond Allocation ($160,000) across 2 ETFs:

• Investment-grade bonds 70% = $112,000 in AGG (AGG at $100/share = 1120 shares)
• TIPS 30% = $48,000 in VTIP (VTIP at $50/share = 960 shares)

Total Portfolio: 80.0 VTI + 35.6 VB + 184.6 VXUS + 1,120.0 AGG + 960.0 VTIP = 2,380.2 shares across 5 ETFs, representing $200,000 invested.

Annual Fees: Using representative expense ratios (VTI 0.03%, VB 0.05%, VXUS 0.07%, AGG 0.03%, VTIP 0.04%), the weighted cost is ~0.036% (~$71/year on $200,000). If you instead assume a flat 0.04% average, that’s ~$80/year.

Let's synthesize everything into a clear action plan you can follow immediately. Here are the seven steps to determine how many ETF shares to buy:

Here's the key mindset shift: stop thinking 'how many shares' and start thinking 'how many dollars to allocate based on my strategic plan.' With fractional shares, every investor can build a properly diversified portfolio regardless of ETF share prices. A $500-per-share ETF is just as accessible as a $50-per-share ETF.

Your focus should be on strategic allocation, low costs (favor ETFs with expense ratios under 0.20%), consistent contributions, and staying invested for the long term. Don't try to time the market. Research shows that even professional investors fail at market timing about 90% of the time. Your edge as an individual investor is that you can invest consistently through ups and downs without worrying about quarterly performance reports.

One final point of encouragement: starting with even $50 or $100 is better than waiting until you have thousands saved up. The important thing is to begin, stay disciplined, and let compound returns work over time.

An investor who starts with $100 monthly at age 25 and continues until age 65 will accumulate more wealth than someone who waits until age 35 and invests $200 monthly for the same 30-year period, assuming identical returns. Time in the market beats timing the market, and starting early beats starting with more money later.

You now have a complete framework for determining how many ETF shares to buy. The answer is: however many shares your strategic dollar allocation buys at current prices. Focus on the strategy, not the share count, and you'll be well on your way to building long-term wealth.