How Many Stocks Should I Own (Or Have In My Portfolio)?

Individual investors vary across the board when it comes to how much risk they can handle.

For example, somebody straight out of high school without any debt will be able to tolerate more market risk and invest in different stocks (like growth stocks) than a retiree living on a fixed income.

Generally speaking, if you can tolerate more risk, you can afford to invest in fewer stocks (and have a more concentrated portfolio).

On the other hand, if you can’t handle any volatility, you probably shouldn’t have all your money in a single stock.

The next thing you should consider is how much money you have to invest. If you’re Warren Buffett, you’ll certainly be making different investment decisions than if you have $100 to invest.

Typically, the trend is that the more money you have, the greater your “ideal number of stocks” is.

This is because when you have a small pool of capital, you can afford to chase higher returns by taking on more risk. When you grow your wealth to a sizable amount though, you’ll start to be more concerned about preserving your nest egg than the actual market returns year to year.

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