How much diversification is enough for stocks?

For myself, i own 80% mainly ETF.

The rest of the 20% consist of mainly growth stocks.

Wanted to do the inverse, but i can't stand the volatility of these growth stocks. That's why i decide to go safe yet still ensure high/good returns.

Therefore i decided to go this route.

For my 20% stocks, it cost of 6 stocks only. With one of them taking at least 10% of the entire portfolio.

Hi anon,

If you're buying asset classes that are already broadly diversified, like UTs or ETFs, then ensure that you are diversified across sectors or countries, since the asset classes already have multiple holdings.

(One thing people forget is that just because it's diversified doesn't always mean its good, if you bought an ETF tracking oil and gas companies, for example, you're going to be bleeding money. Or the STI).

If you're managing individual holdings on your own, the best number is one that you can comfortably manage. I'd say 10-20 holdings is a decent number, unless you're retired and have a lot of free time. Don't end up with 50 stocks in your CDP accounts, I have no idea how one is going to manage and track that number all at once.

OPINON: diversification is when there is no distinct moat or competitive advantage in the sector. Eg. Ultility. Then just get an ETF coz u never know who is the winner. But for sector with clear moat like the Tech, i would rather buy MSFT, Amzn etc.... rather than tech ETF for max gain (& volitality).

How much diversification u need? Actually if you can focus ur resource on 2 - 3 very good company u will be very wealthy compare to owning 1000+ companies which u dont know what they doing. Personally, i just buy the top 5 holdings of S&P500 rather than buying the ETF. More voliatility but will beat the index in long run.

Hello, to add on to everyone's answer which hasn't been mentioned yet... you should also take a look at your investing capital first. With $10,000 or lesser, it wouldn't make sense to invest in tons of stocks, let alone 30. If you want more shares, you could look out for specific ETFs to target the many stocks you want.

As a rule of thumb for myself, with $10,000, just getting 2-4 of the best stocks you have researched on will do. You can diversify in other ways by putting another sum of investing capital you have, in say.. a robo-investor, etc.

Do note that diversification is important, but over-diversification is also a problem.