Diversification – Part 2 (Guide to Diversification)

Invest

By A Young Investor's Diary • April 22, 2012

Just to recap, these are the 4 major type of risks that we are susceptible to when we are investing:

Taking into account these risks, here is my personal guide on how many stocks one should hold:

As many excellent stocks that one can find at a good price
As many stocks as one is able to understand in depth and have the sufficient time to follow
As many stocks as one can have without incurring too much transaction fee in the form of min brokerage fee (not applicable for standard chartered brokerage user)
As many stocks as you can afford to suffer a total wipe-out in any of the stock.
As little concentration in a similar industry unless you are being kept highly aware of the intimate details of the industry or you are very confident in it.

Rule no ...

...