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
Seedly logo
Seedly logo
 

Advertisement

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 :)

SeedlyTV S2E01

7

      Discussion (7)

      What are your thoughts?

      Elijah Lee

      Elijah Lee

      02 Apr 2020

      Level 18·Independent Financial Advisor at Phillip Securities (Jurong East)

      Hi anon,

      Don't fret about diversification first. You are right though, $20K is not sufficient capital to build a diversified portfolio of individual holdings. Your options are to:

      • Get around 2-3 stocks to start, and continue to save capital to buy more later on (surely you won't stop at $20K worth of stocks)

      • Diversify immediately via ETF or unit trusts.

      Both options work fine, and will just be a matter of what you prefer.

      I've read somewhere about the 10 stocks thing, but don't have a link at the moment. However, having too many holdings is also counterproductive as it is difficult to track.

      Reply

      Save

          Sharon

          Sharon

          09 Apr 2020

          Level 10·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.

          Reply

          Save

              Everyone has their preferences on how much they should diversify. 10, 20, 100, 500 etc. It all depen...

              Read 5 other comments with a Seedly account

              You will also enjoy exclusive benefits and get access to members only features.

              Continue with Facebook
              Sign in with Apple

              Sign up or login with an email here

              Write your thoughts

              Advertisement