Graff says that based on statistical analysis, financial experts believe that 20 is the minimum number of stocks necessary to see the benefits of portfolio diversification, and it's best to cap it at around 30 stocks.
Diversifying your holdings typically means reducing your investment risk and locking in gains. A simple math exercise shows how holding too much company stock can impact your financial situation.
Warren Buffett (Trades, Portfolio) has famously said he is against diversification. "Diversification is a protection against ignorance," Buffett once said. "[It] makes very little sense for those who know what they're doing."
Buying Stocks or Options in Your Company Intelligently
ESPPs that allow you to purchase stock at a discount are almost always worth participating in. You can sell the stock at an instant profit, which removes your risk. But if you plan to hold the stock in your portfolio, be careful you're not overexposed.
To answer your question in short, NO! it does not matter whether you buy 10 shares for $100 or 40 shares for $25. Many brokers will only allow you to own full shares, so you run into issues if your budget is 1000$ but the share costs 1100$ as you can't buy it.
If you own too many stocks, your returns could be diluted and make it difficult to keep track of all your holdings. If you own too few, a bad day for one or two stocks could make you lose sleep.
There are no fixed guidelines but I would recommend a maximum of 10% to 15%. Owning more could expose you to financial risk if the stock suddenly declined in value. The ideal allocation for you will depend on your goals, risk tolerance, and time horizon, factors you may want to review with a financial professional.
Having a diversified holding is always better. One cannot be sure to have picked the right stock always. Some times, when we buy a stock it will have all the strengths, while over a period, there can be some bad news which will hit the stock and it can have serious weakness in price.
Financial-industry experts also agree that over-diversification—buying more and more mutual funds, index funds, or exchange-traded funds—can amplify risk, stunt returns, and increase transaction costs and taxes.
Owning hundreds of stocks is simple and easy. And it will earn you average stock market returns. In fact, buying an index fund is what most investors should do. It's a good “set it and forget it” option for people who don't want to work on their investments.
Buffett is an active investor, picking and choosing individual stocks he sees as attractive investments. If you're looking to emulate Buffett, you might buy your own portfolio of individual stocks. ... Instead, he says, investors should buy passive investments, which seek to replicate the performance of a market index.
Warren Buffett's 3 Highest-Yielding Dividend Stocks
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