Guidelines for Beginners: How Many Stocks Should You Have in Your Trading Portfolio?
There’s a lot to think about when it comes to starting your own stock portfolio as a beginner. There’s a ton of lingo to learn and approaches to consider, but one of the most important questions you may find yourself asking is how many stocks should you actually have in your portfolio?
You could have one or two, but is this enough to actually start making a profit, so you have more to invest that will allow you to grow in the future, or should you go for ten or more and maximize your chances for succeeding? While there’s no right or wrong way to think about this, here are some considerations that can help you make the right decision for yourself.
Think about What Type of Investor Are You?
First things first. Think about what kind of investor you are and what kind of career you want to have. Some investors like to have a very hands-on approach to their portfolios and will want full control over the direction it will take. On the other hand, some investors would rather invest and then forget about their Demat and trading account, basically allowing it to hopefully make them money in the background of their lives.
Whichever approach you want to take will determine how many stocks you have. If you’re going to slowly make money in the background, having a handful of solid stocks can be the best approach because there’s not much to think about. If you’re taking a more controlling approach, then you’re not really capped by how many you have.
How Much Time Do You Have?
If you don’t have a lot of time to invest in your stocks, then having a mountain of stocks in your portfolio may be a lot to deal with and think about, and you may not be able to dedicate enough time to manage your portfolio properly. When you’re starting out, start with a handful of stocks and then see how you go.
Take things slowly, and when you know you have enough time and understand the basics of trading, you can start investing in more.
Consider the Average
While there’s no right or wrong answer to ‘how many stocks you should have’ if you want to consider the average that stock traders have, most will average between 10 and 30 stocks at a time. For many, having fewer than ten stocks don’t offer enough diversity to make a profit, and you may not see a notable return.
The opposing side of the coin is that having over 30 is way too diverse, especially when you’re starting out, and the chances are you won’t have too much investment to spread across all the stocks. When managing multiple stocks, especially if you’re managing different accounts, such as a Demat account, a bank account, and a trading account, then it’s well worth getting an open trading account, so you can manage them all from one place; ensuring you’re able to manage your investment, your stocks, and your profits easily.
As you can see, there’s no right or wrong number when it comes to how many stocks you should have as a beginner in your portfolio, but instead, it’s all about figuring out what works for you. Just take things slow and steady, read up on the stocks you’re investing in, and learn as much as you can, and you’ll be sure to have everything you need to make the best decision possible.