Your portfolio should have the stocks that will help your investments grow quantitatively as well qualitatively. More than the number of stocks you own, what really matters is the type of stocks that are present. If you look at the reports that most reputed brokers and stock research firms provide, the diversification of stocks in your portfolio can help balance out the portfolio risk. However, beyond a certain limit, the risk remains constant and there is no way to mitigate it completely. This shows two things:
1. Every portfolio will carry some amount of risk. The only difference is whether it is low, moderate or high.
2. At least a minimal amount of risk in any portfolio helps an investor understand the importance of diversification and strategizing. Risk is actually a crucial factor for organizing your investments.
It is safe to assume that one can own anywhere between 10-30 stocks in their portfolio. However, not all of them should be moderate to high stocks. Most investors play it safe by keeping only multicap stocks but even that is not helpful for letting your investments grow. One way to make your portfolio more useful is to seek out high growth stocks only.
The kind of investor you are will also affect the number and quality of stocks in your portfolio. According to market experts, it is good to have about 12-18 stocks that help you meet your investment goals. Therefore, paying attention to the quality is very important. Aggressive portfolios tend to have more volatile stocks because such investors have a high-risk capacity while conservative portfolios and low-risk investors go for less volatile stocks.
The other factors like the investment horizon or the investment tenure and the investment strategies will also matter here. When it comes to the second factor, every investor will not have the same portfolio and so, the strategies will be different as well. Always aim to look out for the right opportunities in the market and try to go for long-term investments if you want to minimize your portfolio risk.
Experienced investors tend to keep a larger number of stocks because they are better at managing them. However, the number of stocks in an investor’s portfolio need not be the same as that of another investor.