You may have wondered about this question before.

How many stocks should I own to be “sufficiently diversified”?

You may have gotten advise from people (especially the finance professionals) advocating the importance of diversifying your portfolio.

Because: “Having too little stocks is risky.”

On the other hand, you may have probably also heard others stress about the importance of holding only a handful of stocks (not more than 5).

Because: “You would not have time to understand and monitor so many stocks.”

So…who is right?

I admit, this is not an easy question to answer.

In fact, I would like you to answer more questions:

  • Do you want to be rich, or are you happy with accumulating wealth steadily?
  • Do you have the temperament required to be rich?

Warren Buffett’s Secret

Many people believe that Warren Buffett became rich because of his phenomenal stock picking ability.