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Does Portfolio Size Matters? How Many Stocks in portfolio ?

Writer: YashJYashJ
Oct 26, 20211 min read


What is Investment Portfolio ?

  1. Collection of Financial Assets owned by an Investor.

  2. Usually Consists of bonds, stocks, mutual funds, pension plans, real estate, gold etc.

  3. Unlike the popular idea, management of Investment Portfolio is not as complicated as it is perceived to be.


How many Stocks in Portfolio ?

  1. There is no "perfect" portfolio size. According to many Investors and Financial Experts, 5 to 15 stocks can be an ideal range for most portfolios.

  2. Many Financial Experts also advice to keep the number between 10 to 30.

  3. It is not a General Rule and many people invest according to their Risk Appetite and Sector Preference.

  4. An Aggressive Portfolio is completely different from Defensive or Income Portfolio. Risk Factor plays the key role.

  5. This should not be considered a one time investment. Constant monitoring is required of the portfolio.


Diversification Factor

  1. Diversification reduces investment risk and can increase your chances of higher return.

  2. Diversification ensures that investment stays safe if one or a few assets suddenly dip.

  3. Allocating funds for portfolio should be based on your investment goals, risk tolerance and duration of the investment.


Other Points

  1. Determine the purpose and objective of the portfolio.

  2. Diversify and it is advisable not to rely too much on a single investment.

  3. Invest Regularly and Rebalance it keeping in sight the main objective of portfolio creation.




 

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