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In today’s #AskDrWealth series, I am going to address the most popular question from our readers and students.

“How Many Stocks Should I have In My Portfolio?”

Which Is Better? – Diversified portfolio or Concentrated Portfolio

Let’s imagine that there’s Investor A and Investor B, with different types of portfolio:

  • Investor A has a portfolio of 5 stocks (concentrated)
  • Investor B has a portfolio of 30 stocks (diversified)

Let’s assume that both portfolios are equally weighted.

This means for A, each stock represents about 20% of the portfolio while for B, each stock represents about 3%.

  • Investor A: 100% / 5 stocks  = 20% per stock
  • Investor B: 100% / 30 stocks = 3% per stock

At a quick glance, inexperienced investors would think that having 5 stocks is better than …