Learn how to stay diversified but keep things manageable.
One of the most exciting moments in your early career is when you finally earn enough money to invest.
Maybe it’s from a salary raise, or an annual bonus, or a growing side hustle — but you finally have a chunk of cash you want “put to work” in the markets.
One of the first questions new investors often wonder is, “How many stocks should I buy?”
The truth is, there’s no “one size fits all” answer. The right number of stocks to own is different for every investor.
Most investors aim to own somewhere between 10–30 stocks in their portfolio.
In my experience, owning fewer than 10 stocks is too little diversity and too much risk concentrated on just a few positions. And owning more than 30 stocks is almost too diversified (starting to look like an index fund) and too much work for the average investor to research and monitor over time.
So I recommend holding somewhere between 10–30 stocks in your portfolio. And, for most investors, owning 10–20 stocks works just fine.
Of course, there are exceptions. Here are two that come to mind:
- If you’re just starting out as a beginner investor and don’t have much money to invest, it’s fine to start by buying just a handful of stocks. I’d encourage you to add more positions over time and strive to own 10+ stocks as you add more savings to your account.
- Some investors who have a lot of money in the market may want to buy more than 30 stocks to be fully diversified.
Similarly, you may choose to create different types of portfolios in different accounts.
For example, an investor might buy 15 blue-chip value stocks in her main investment account, but experiment with 20 high-growth small cap stocks in her Roth IRA retirement account (a total of 35 positions).
If you’re pursuing multiple different strategies in different accounts, it can be fine to own more than 30 positions in total.
But, keep in mind you’ll need to do some type of research and monitoring on everything you buy. I’d discourage taking a “set it and forget it” approach to your stock investments.
Now that we’ve laid out a general guideline that you should own somewhere between 10–30 positions, let’s look at some supporting research and tips to consider.