How Many Companies Should You Hold In Your Portfolio?
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- Опубліковано 25 сер 2024
- How many companies should you own in your portfolio and can you be TOO diversified?
In this video, I'll talk about diversification and how it impacts risk and your potential gains as an investor.
Yes, you can be too diversified, in that it will only give you average results, but it will also lower your risk. Being less diversified means that you could potentially have bigger gains, but the risk of bigger losses is also there.
So it's really all about balance and what your personal risk tolerance is, as well as how much time you have to invest.
So while there isn't an answer to how many companies you should hold in your portfolio, as each investor is different, it is important to think about it.
Happy investing.
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DISCLAIMER:
Investing carries risk.
The content in these videos is my opinion and is not intended to be substituted for your financial situation.
Please do your own due diligence and seek professional advice where necessary.
Knowing how to read basic financial statements is everything. I have met lots of folks who are deep into technical analysis but always neglect fundamental analysis. For me the fundamentals are everything.
Hi Tracey, can you do a video on your portfolio? Eg what shares you are currently holding and why?
Thank you for another great video!!
Interesting. Diversification isn’t the goal if the stocks don’t make you feel confident . Thanks for another amazing video
Depends how many financial reports you have time and want to read every quarter. The best way to reduce risk is to understand financial performance and how a company is deploying its capital.
Hi Tracey
Thank you for your great insights.
As a dividend investor you mentioned in your past video that you look for companies with a starting yield of around 5%. I would love for you to do a video on companies who have had a growing dividend over the last 5/10 years no matter what the starting dividend was?
Cheers
Ooh yes! Love that idea ✨
Thanks for another great video!❤
Diversification is the only free lunch in the stock market.
Cheers Tracey .🙏👍🇦🇺
I believe there's probably as many people that have made it in diversion as there has been in focussed stock buying
The way I handle it is that I have two different trading accounts.
One is the buy and hold dividend investing account. And this has 2 ETFs and usually around 10 individual stocks. Past that number and you actually aren't gaining anything useful from extra "diversification", the portfolio gets more cumbersome to manage, and as you say Tracey there just aren't that many quality dividend stocks to choose from on the ASX :) I generally just add money every 2 weeks on payday on a simple round-robin basis, unless there is one stock I deliberately want to build up to be oversized relative to the others, or because it has an ex-dividend date coming up that I want to take advantage of. It's pretty straightforward to manage and should suit most dividend investors without getting too complicated
The second is the more speculative account hunting for growth stocks, mostly on the US markets. Here I try to keep it to around 5 max in play at any one time. But you really need to know what you are doing to play that game and hope for outsized returns, most people would be far better off just having a few index ETFs and collecting the average market/sector growth.
I have 2. AAPL and AMZN
I wasted 20 yrs trading individual stocks.
Finally stopped and buy 3 etfs. Im well up now and no stress.
Stock picking is such a waste of everything
Less stress and sleeping well at night is the key to a good portfolio. I still like individual companies better, but it's definitely more work.
What happened, if you don't mind sharing as a cautionary tale? Most people only speak about their wins, so it'll be insightful and refreshing to hear otherwise.
@@vvjp5732 most ppl lose.
Mine was just buying and selling many small parcels of stocks over many years. You win some you lose some.
If I had of DCA into a ETF instead I'd have half a million dollars.
It's not some interesting story ha
@@vvjp5732 stressful, time-consuming, and hard to analysis good business and so many factors involved in stock picking. you might end up losing a lot of money investing in individual stocks. try to take a look at a few graphs for individual stocks and you will understand it.
While the market is technically "average", the truth is it's difficult to consistently beat over the long term. You have to remember that in an index companies are ranked by market cap, so the big successful companies dominate anyway, and they're likely the same ones you might own individually. While the ASX pays ok dividends, for those of us who want to maximize that, you're probably right that it's not the best play. And certainly the majority of my portfolio is individual stocks, but that's personal preference over what I'd recommend to a friend.
Agreed ☺️
Hey Tracey can I ask if the ASX 200 has returned 8-9% annually then what kind of returns would expect with a more single stock approach? I would assume with the higher risk you would want a higher return.
Tia
Completely depends on the company. I’ve had some increase 20 to 30% for a while and others that chug along at below avg growth. The high growth companies don’t sustain those big annual numbers for long though, but it’s great while it lasts. Generally my aim is to do better than ‘average’ but mostly I really only care about the dividends.
Im new to investing and looking for a very solid very investment of 10-30000 to start with one company, can you please give me your advice? i accept all responsibility for the choice and understand its not financial advice etc. all that. I just dont trust my final decision on the first attempt. So far Ive nailed it down to 5 options: NWH, APE, CNU, WHC, SPK
Hello, that's the thing with investing. You have to make the final decision yourself. You could try investing 1k and see how you feel after. Hope that helps.
ASX SPR
@@martabellydance hey, thanks yeah I did. I went with ETFs
@@hairypawter8475 good on you :)
Perfect video, was on my mind to ask this, thank you. Do you hold any single stocks from US S&P500? or prefer ETFs? Thank you :)
I don't hold any individual stocks from the US (except for ETFs). I used to. But the foreign tax was annoying so I switched back to only Aus stocks :)
2nd😊
It's also a duopoly in aviation in Australia. Can you do a video on holding airport stocks
So are you going to, would like to, or have, invested in overseas markets?
How would your research as a dividend investor charge?
I have in the past but the foreign tax was high so I didn’t continue with it. Dividends in Australia especially with the franking credits was a better option.
I believe American gov charges 30% tax on their dividends to foreigners. 15% for Canadians as we get a discount. It's still pricey. Usually there are tax advantages to investing in domestic companies (franked in Australia, up to 50k income tax fee in Canada) etc.