Pure Financial Advisors’ Robert Canavan, CFP® explains the rationale behind deciding how many stocks you should own in your investment portfolio. As with so many financial questions, “it depends.”
Today, I’m going to answer an age-old question has dogged investors for decades. How many stocks should I have in my portfolio? The truth is, it depends.
The question is, what are you really investing for? Before one can truly answer that question, you’d need to flush out more information. The clients that I work with are normally concerned about retirement and creating an efficient, risk-averse portfolio. In that case, I’d recommend owning thousands of stocks, where you’d want a properly diversified global portfolio. That would be made up of 12 to 16 different asset classes.
Finding the next Google would be great, but for the majority investors, that’s never going to happen. So you’re better off focusing on asset allocation. Maybe you can solve your needs with one stock, maybe it takes 1,000 stocks, but asset allocation will help you reach your goals. It will help you achieve better returns while potentially lowering your overall risk. So for me, more is better. But what is right for you?
If you’re interested in putting together a financial plan with a properly diversified portfolio, give me a call. My name’s Robert Canavan, I’m a CERTIFIED FINANCIAL PLANNER™, and I work for Pure Financial Advisors.