How many stocks should I buy in my portfolio?

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Creating a profitable stock portfolio is not an easy task. Different people have different financial goals, investment options and risk appetite. Thus, the count of stocks that one should invest in is influenced by multiple factors and varies from one investor to another.

Investment in stocks depends on a variety of factors like time horizon, risk appetite, financial goals, etc. It takes years of experience to curate a portfolio that will suit your financial goals and serve the exact purpose of your investment. No experts have a recommended number as to how many stocks you should invest in. There is no concept like “Perfect Portfolio Size”. It is absolutely an investor’s personal choice to determine the number of stocks based on his/her preference, stock performance, market movements and time horizon. However, experts recommend that diversifying your stock portfolio across Large, Mid, & Small Cap stocks is the key to create an optimal portfolio. It is also vital to keep refining and readjusting the portfolio as per the market movements and from time to time to sustain the positive performance of the portfolio. 

Diversifying your portfolio will help in many ways and reduce the overall risk of your holdings. A well-diversified portfolio means a portfolio spread across various companies, sectors & even geographies. It reduces the negative impact of factors such as failure of one company, poor economic conditions in one geographical area, and decline of any specific sector. 

Before making an investment, one must consider his own tolerance to risk. This will help in deciding the industry, sector, and stock that you must invest in.

Additionally, another factor that is highly important, is the investor’s quality of research gathered before making an investment. A well-researched investor can make a concentrated investment to maximize returns. It must be understood that the key to investment is maintaining a balance between risk and return. Furthermore, a wise investor will also take note of the cumbersome and time-consuming process required in doing research on the relevant stocks. 

It is also said that an ideal investment portfolio is not made only of individual stocks. Various other means of investment like exchange-traded funds (ETFs), bonds, Mutual Funds must also be considered. It is important to consider a diversification strategy that mixes asset classes. 

Hence, when curating your portfolio, it is important to consider the time horizon & keep a check on  your portfolio regularly. You can also consult your financial advisor for insightful research reports. Be assured that the right investment strategy, research and financial acumen will take you a long way. 

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