How Many Stocks Should an Investor Hold to have a Good Portfolio?
Here is a simple guide to owning the right number of stocks for adequate growth and risk management.
Published April 20, 2021.
While it might seem that many sources have an opinion about the "right" number of stocks to own in a portfolio, there is no single correct answer to this question.
Putting it simply, most investors should own about 10–30 stocks in their portfolio. Having fewer than 10 stocks is too little diversity and too much risk concentrated on just a few positions. More than 30 stocks are almost too diversified (like an index fund) and too much ongoing work for the average investor.
So I recommend holding somewhere between 10–30 stocks in your portfolio, and for most investors, owning 10–20 stocks works just fine.
In my world, diversifying is the key, and the perfect answer. A properly diversified investment portfolio should include:
- Mutual Funds
- Investment in Real Estate
- Government/Corporate Bonds
- Fiat Cash
Of course, diversification isn’t a one-time task. You should check your portfolio often and make changes accordingly when the risk level isn’t consistent with your financial goals or strategy. I suggest rebalancing your portfolio at least two times per year.
Investing can be exciting and fun but should be directed by an informed approach that considers factors like your investment time horizon and subsequent risk appetite, as well as specific saving targets and underlying fees.