How Many Stocks Should You Own?
Been looking over your portfolio and noticing a bit of this, some of that, and a touch of whatever else you could find? Us too. If your portfolio looks more like a stamp collection — filled with one of everything — then consider simplifying your strategy. It will not only make your money easier to manage, but will also benefit your bottom line, according to CNN Money. They suggest a simple, two-part strategy for maximizing your investment returns…
1. Direct 90 percent of your U.S. equity allocation into a total stock market index fund that automatically gives you a stake in thousands of companies. That guarantees you a piece of every superstock that already exists or might emerge later – and, more important, it means you’ll be adequately diversified and your investing costs will be at rock bottom.
2. Pursue your search for the next Microsoft or Google by researching the daylights out of a very small number of companies and putting the remaining 10 percent of your portfolio into your one to three best ideas. This way you’ll let yourself have a little fun. You will also minimize your risk and maximize your hope.
We’re not sure “hope” is a valid investment strategy, but we know what they mean. It doesn’t take a massive, complicated collection of investments to do well in the long term, simply an easy, consistent, focused method of saving and investing.
How many stocks should you own? [CNN Money]
(Photo: Getty)
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