Saving, Managing Debt, and Budgeting

Risk / Reward

How many individual stocks must I own to have enough diversification against unsystematic risk?

Although many experts disagree with assigning an exact number, a diversified portfolio of individual stocks should fall within a range of between 12 and 25 stocks. The answer may be quite complex, as it based upon your tolerance for risk. Investors who are quite riskaverse will seek more diversification, and hold more individual positions. In contrast, an investor with a high tolerance for risk may hold fewer individual positions.


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