facebookI am looking into diversifying my portfolio. But I also know that my capital isn't huge (~20k). For diversification, I understand that portfolio shld have 10 stocks at least, is this correct? - Seedly

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Anonymous

09 Apr 2020

SeedlyAMA

I am looking into diversifying my portfolio. But I also know that my capital isn't huge (~20k). For diversification, I understand that portfolio shld have 10 stocks at least, is this correct?

With my capital, would it be worth it to go into 10 different stocks (1k each) or 4 different stocks (5k each)? I just worry that if I only go into 4 different stocks, my diversification would not be good. Advice please :)

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Discussion (7)

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Sharon

09 Apr 2020

Life Alchemist at School of Hard Knocks

I think typically you will want to keep your cost of dealing with each stock low. If it's $1,000 per stock, it means even with DBS Vickers Cash Upfront ($10 per trade + other costs e.g. SGX fee, GST etc.), your expense is about 1.1% per stock. Usually, we want to keep it below 1%. I'd suggest you can start with $2,000 per stock, so you get about 10 stocks with strong financials and wide economic moat. Just make sure you know what you are buying into. If 4 stocks are easier for you to keep track, maybe it's better that way.

Everyone has their preferences on how much they should diversify. 10, 20, 100, 500 etc. It all depends on the individual. If it were me, I'd consider diversifying not just into stocks, but bonds and gold as well. Going into mutual funds where, with minimal capital, mutual funds will help me diversify into hundred over companies.

Elijah Lee

02 Apr 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

Don't fret about diversification first. You are right though, $20K is not sufficient capit...

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