Number of Stocks (Portfolio size)

The number of stocks in a portfolio is the investor’s choice. Holding very few stocks increases the risk of high concentration, which can result in higher drawdowns. On the other hand, having too many stocks in the portfolio leads to over-diversification, which can significantly impact overall returns.

A portfolio size of 10 to 20 stocks is generally recommended. Holding more than 25 stocks may lead to over-diversification, while having fewer than 10 stocks increases concentration risk.

These are general guidelines, and the ideal portfolio size also depends on the number of stocks in the investment universe and the types of stocks being considered. Investors should determine the right portfolio size based on their own research, preferences and type of stocks.